No further details.
Yes, the employer has violated the law by seeking to avoid payment of its share of employer's taxes for social security and medicare. As for you, technically yes if you fail to pay your employee's share of taxes. If you do, then you probably have not violated the law BUT you are hurthing yourself because eventually your social security benefits are calculated based upon your earnings over your lifetime. If earnings are not reported, you do not get the proper credits. You might want to consult with an attorney to make sure you are protected both from a criminal perspective and a social security perspective.
Paying "under the table" as you say implies that neither the employer nor the employee are reporting the earnings. If this is what is occurring than that is a violation of law. If someone is being paid cash, but taxes are taken out, then no violations have occurred.
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I agree with the other comments as being true, however, I would want to know the business relationship between the employer and the employee because the employee may actually be an independent contractor or be paid by 1099. While this seems unlikely given the fact pattern, it is something as an employment attorney I would have to ask.
Well it depends. I would say yes for the employer, maybe for the employee. The employer has a number of duties, including reporting income and withholding the appropriate taxes. This would include, social security, federal income tax, and federal unemployment compensation tax. Depending on the size of the employer, they may also have to carry worker's compensation insurance. There are penalties for not reporting and not withholding. As an employee, you want your wages reported to Social Security because when you retire or if you are disabled, your retirement or disabiliity benefits will depend on the amounts reported as wages.
As to the employee, the employee has a duty to report his/her income and pay the appropriate taxes. So if the employee takes the "under the table" payments and does not report (or under-reports) his/her income, then the employee has "broken the law" by failing to report wages and pay their share of taxes. I hope this adequately addresses your concern. Good luck!
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