I was recently terminated by an employer due to the fact that I told him that not paying taxes was illegeal. The employer does not withhold taxes from his employees, he has them as independant contractors when in fact they are not (proven by teh ABC Test) He made almost a half million dollars in 2011 and never paid a penny to the state or to the IRS. The owner as well as his family are collecting SNAP benefits and Husky from the state and should not be due to their income. He also is wireing funds outside the US to hide some of the money. What can I do to make sure he pays back to the state and government what is due to them?
1.If he is a CT resident and taxpayer, he can take state benefits.
2. Is he an entity or just a sole proprietor? (further insulates him if he is an entity)
3. I know that IRS has recently (and unjustly) declared war on independent contractor employers, but there are many categories where it is proper. You didn't state your job and I can't tell if it is independent contractor type.
4. I wrote an article on this, linked below.
5. How do you know that the employer is "not paying his taxes"? Do you have proof that he is not paying his taxes on his profits?
6. In the article you will see more than the ABC test. Although the IRS would like to forget it, they have had a safe harbor operating for many years.
7. He just might take advantage of the "amnesty" (very unfair since hiring people as independent contractors has always been legal) and he might end up doing payroll and withholdings for everyone with a proportional reduction in salary/hourly rate. He will have to pay extra for payroll, pay more withholding and pay extra for a bond he might purchase against payroll company misfeasance.
In addition, it will result in potential loss of tax deductions for the independent contractors once they become employees (depending upon what the job entails). They will lose or have limited all their schedule C deductions.
There is also the issue of the State Employment Tax division. You didn't state whether THEY had traditionally also permitted his independent contractor status.
Even though your contention, if successful might hurt the employer and your remaining employees, you have the right to report this:
1. To IRS
2. To State Labor board (retaliatory firing)
3. To State Taxing authority
Good Luck with this matter
Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.
Securities / Investment Fraud Attorney
You should contact the US Attorney in CT:
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.
You can contact the IRS WhistleBlower unit using form 211 and, possibly, secure an award.
Also, the CT Department of Labor would be very interested in this. Just call and contact the Chief Auditor there.
Marty Davidoff, email@example.com, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.