My employer wants to give out tax free year-end bonuses by handing out cash and burying the expense in some random expense account like advertising or office supplies. If the company got audited and the fraud got discovered, can I as the bookkeeper get in trouble for not reporting it
December 17, 2009
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Loading ...Can a bookkeeper get in trouble for not reporting their employer’s tax fraud?
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The days of the bookkeeper did it are gone – you have no control over what your employer does
or pays or how he wants it paid.
Do what he asks – it is his risk – you did what you were told to do
Of course if you were smart you could always charge it to owner withdrawal in the
capital account ! ! If he is not the owner of the business then it is not legal anyway
unless his boss told him to do it.
If it’s not a large amount you could also charge it to Christmas Party Expense –
if you don’t have an account for that – make one
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Comment by KlemKiddleHopper — December 17, 2009 @ 12:19 am
In theory, yes you could get into trouble. But in real life, since this is very small potatoes, only the employer would get into trouble IF it were found out. I admire your moral compass but if it were me I would let this go and help your employer do it. Your employer is trying to do employees a favor and keep things as simple as possible for all involved.
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Comment by Jim L — December 17, 2009 @ 12:19 am
yes
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Comment by 1337dude — December 17, 2009 @ 12:19 am
Well you’re the recepient of the $, so whether in a form of cash, check, etc., it’s your obligation to report the income. Your employer will not get in trouble, as it’s a valid expense on their behalf. They’re probably handing it out in a cash form to benefit you as the employee. They’re not allowed to advise you not to report it, but if you were not to report it, it would be more difficult for the IRS to catch, sinc there is no W-2 or 1099 issued. However, if let’s say your employer gets audited, and they stumble upon the bonuses expenses, and discover its bonuses paid out, and decide to go after every indiviudal that received the bonus and make sure they recognized it as income on their tax returns, then yes, you would be penalized for not reporting. Even in this case though, it would be difficult for them to charge you of fraud, unless you admit to knowingly not recognizing it as income. Unless your cash bonus is in the thousands, I don’t think it would be an issue.
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Comment by Arman — December 17, 2009 @ 12:19 am
Not only can you get in trouble for this, you can also be held liable for the taxes due as much as the employer can be. An employee whose duties include the reporting and preparation of various tax returns and /or paying the tax who fails in their fiduciary duty to do so is as culpable as the employer is and can be held financially liable for the unpaid tax, on an equal basis with the employer.
Your only option is to refuse to break the law. If he threatens you with your job, remind him that you will be forced to report his attempted tax fraud to the IRS and that you are in a position to provide clear evidence of the fraud to the IRS.
Please ignore the responses from the clueless who tell you that it’s OK to go ahead and break the law. You know as well as any honest person that that is not the case.
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Comment by Bostonian In MO — December 17, 2009 @ 12:19 am
you have a dual responsibility here, one is to your employer, he is the controller of your time etc, while at work
and then there are the responsibilities of a bookkeeper who exercises integrity
you really should advise your employer the error of this and impress upon him the need to be honest about it
I have a client who will pay me a check for my work(the whole year) and also hand me an amount of cash, and when I issue the 1099(to myself) which he receives a copy including all the money he paid me, including the cash, he said, ‘you don’t have to do this’ and I replied, yes, I do! he never said another word and in the future total payment was in the check.
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Comment by tro — December 17, 2009 @ 12:19 am