Consequences of Hiring Illegally
OK, even if I do get caught, how bad can it be? Worse than you can imagine.
Because you must report household employment taxes on your personal federal tax return, failure to pay the appropriate taxes constitutes federal tax fraud. Those three little words subject you to the following consequences:
- Payment of all back taxes, penalties and interest.
- Federal charges of fraud and tax evasion.
- Civil and criminal penalties, including fines, potential imprisonment, and a criminal record. Think we're exaggerating? Here's the law.
- Ruining your reputation and career, especially if you're an attorney, accountant, financial adviser, or any professional who trades on integrity. Being labeled a "tax cheat" isn't good for anyone's business.
- If you're a California attorney, Business & Professions Code §6068(o)(4) requires that if you're even charged with a felony such as tax fraud, you must report the charge to the state bar, potentially jeopardizing your ability to practice and earn a living.
- Oh, and by the way, if you advise your nanny not to pay her own taxes, that results in additional charges of fraud and conspiracy, with penalties of up to three to five years, respectively, as well as fines of up to $250,000.
Remember: There is no statute of limitations for failure to report and pay federal employment taxes.
In addition to these penalties, you undoubtedly will pay significantly more in professional fees to lawyers and accountants defending yourself in an audit or criminal prosecution than you ever would have spent paying your nanny legally.
Want an example of this debacle? Read about what happened to Bernard Kerik, President Bush's nominee for Secretary of Homeland Security, and the consequences of his "Nannygate" problem.
Instead of agonizing over civil and criminal penalties, check out all the advantages of hiring legally.
Let Legally Nanny® take the worry and hassle out of your life so you can enjoy your family and do it all with the peace of mind that it's done legally. Contact us for a free consultation today!
Legally Nanny • 714-336-8864 • info@legallynanny.com