[fabsroman]

PBR,

They are getting tougher on employees, but they just aren't enforcing it enough. Honestly, I think the IRS and INS should get tougher.

Way too many people cheat on their tax returns, which really kills me. The IRS should audit anybody that keeps switching tax return preparers. I cannot tell you how many people shop around for preparers that are willing to take inappropriate deductions. With a tax gap of $240 billion, they should really work on being the nasty IRS of the 1980's and not the newer, friendlier IRS of the 2000's. That is also changing, but not as quickly as I would like.

Regarding illegal immigrants, I agree with you completely. If penalties were actually enforced against employers, this entire subject would be a moot point. The current penalty is $25,000 per illegal employee, and the IRS and state audit teams are linking their data together whenever they find a violation. A way that employers try to get around this problem is by hiring illegals as independent contractors. Then, withholding doesn't have to be done until the 3rd year the employee works for them. Essentially, an IRS notice is sent to the employer the first year the "independent contractor's" tax ID information does not match SSA and/or IRS records. To prevent withholding, the "independent contractor" merely has to sign a SS-9 form. After the 2nd 1099 does not match SSA and/or IRS records within a 3 year period, the "independent contractor" must get a certified form from SSA regarding his tax ID number or the employer is required to do backup withholding. At that point, the employer could merely give the "independent contractor" a 28% raise and everything would remain status quo for the employee.

There should be a special task force that looks for these trends in businesses and then does a surprise raid and/or an audit of the worker's status to determine if they were improperly classified as an independent contractor instead of as an employee.

By the way, the fine for employee somebody that is illegal is $25,000.

Oh yeah, an employer can also register with the SSA so that they can look up the validity of tax ID numbers. Guess how many willingly do that. There really is no excuse for employers hiring illegals, so I say enforce and fine away. Maybe a couple of businesses need to be put out of business to get the message across.

The next problem is how do we catch businesses that pay illegals with cash? That might be a little tougher.