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State Auditors Hunt Tax Cheat Employers

Austin Jenkins
08/06/2007

They're not exactly slapping handcuffs on business owners. But a new crack team of Washington State auditors IS busting employers who cheat on their taxes. Specifically unemployment taxes. Olympia Correspondent Austin Jenkins reports.

TRANSCRIPT

WASHINGTON STATE HAS SEVEN NEW AUDITORS. THEIR JOB IS TO FIND COMPANIES THAT ARE CHEATING ON THEIR UNEMPLOYMENT INSURANCE TAXES. THE RATES ARE BASED ON THE NUMBER OF LAY-OFFS A COMPANY MAKES. THE SCAMS RUN THE GAMUT. THERE ARE COMPANIES THAT SIMPLY DON'T REGISTER WITH THE STATE. OTHERS DON'T PAY TAXES FOR ALL OF THEIR EMPLOYEES. BUT HILARY YOUNG WITH EMPLOYMENT SECURITY SAYS THE BIGGEST SOURCE OF FRAUD IS WHEN COMPANIES MERGE OR RESTRUCTURE IN ORDER TO GET INTO A LOWER TAX BRACKET.

YOUNG: "What they might do is either merge with another business so that they can then take on that business' tax rate, you know which may be significantly lower. Or they may say well okay well let's close this business, reopen it as essentially the same business. They then would get that lower tax rate of the industry average."

IN ITS FIRST YEAR, THE NEW FRAUD UNIT FOUND NEARLY 5 MILLION DOLLARS IN UNPAID TAXES. THE TAX CHEATS DON'T GO TO JAIL, BUT THEY DO HAVE TO PAY THE BACK TAX PLUS PENALTIES AND INTEREST. I'M AUSTIN JENKINS IN OLYMPIA.

© Copyright 2007, KPLU

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