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  1. #1
    Join Date
    Jan 2008
    Posts
    1

    Default Tax Evasion

    I know someone in Utah who has been working for a man for $20 an hour and being paid under the table. I would guess that he only brings in about $8,000 a year but he has been working for him for about 5 years. He said that he has never paid his taxes on this income. If I turn him in will the IRS do anything about it or is the amount not large enough? Also, if he is convicted what is the usual punishment? Is there something I can do when turning him in to make it more sure that he will be punished?

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
    Posts
    98,846

    Default Re: Tax Evasion

    We can't predict the future. Report it if you wish, providing as much evidence as you have, and see what happens.

  3. #3
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Tax Evasion

    Quote Quoting Rivals
    View Post
    I know someone in Utah who has been working for a man for $20 an hour and being paid under the table. I would guess that he only brings in about $8,000 a year but he has been working for him for about 5 years. He said that he has never paid his taxes on this income. If I turn him in will the IRS do anything about it or is the amount not large enough? Also, if he is convicted what is the usual punishment? Is there something I can do when turning him in to make it more sure that he will be punished?
    I am going to give a different answer than the previous one. I think that this one is too small potatoes for the IRS to take any serious interest in it, particularly if you cannot provide any actual evidence.

    If the IRS were to take any interest in it, the worst "punishment" he would get would be to be required to pay the tax, with interest and penalties.

  4. #4
    Join Date
    Feb 2008
    Posts
    578

    Default Re: Tax Evasion

    If his gross income from all sources (including taxable interest, dividents etc) is under $8750(or $10,050 if over 65 yo) and he is a single person, he is not required to file a return nor pay any tax as his income falls below the minimum threshhold. See IRS publication 17 for more details or other situations. Chances are if his income is even a few thousand more he still won't much, and the punishment will be at worst very small interest and penalties as there just isn't much tax liability. I doubt IRS will even bother. IRS only criminally prosecutes high profile willful tax offenders, maybe 1000 per year total in the whole country. Most actions are civil in nature and result in levys, liens, judgments, seizures, etc

    That said, is he technically an employee or a contractor? If he is technically an employee then his employer is potentially in far greater trouble than he could ever be. Typically employers are responsible not just for withholding state and federal income taxes and submitting quarterly payments, but also for withholding and paying social security, unemployment insurance, workers comp, etc, etc. Here's a brief overview of the requirements

    Off the books employees and employers often think they're beating the system, until the employee retires and finds out that their employer never paid into their Social Security account, or if they're injured or laid off and now have an extremely difficult situation as they were never on the books for workers comp, SSD, or unemployment. There is legal recourse, but it's slow and doesn't usually work out well for either the employee or employer. You may actually ultimately do him a favor by reporting him.

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