Fraudulent Invoicing of Payroll Taxes in Construction
Author Robert Becker is quick to point out that some contractors/subcontractors will continue to invoice for payroll taxes beyond the statutory limits and pocket the excess as profits. It’s safe to assume the extra amounts are not being reported to either the Federal or State Government. This fraud is likely to occur when a project begins and employees are transferred in from other projects during the year, where typically the payroll taxes being billed are on the first dollar earned (from the new project) with no consideration to the employees’ year-to-date compensation.
Second, when craft employees transfer to other projects during the year and transfer back, the payroll taxes may start being billed in error as though they are new employees. This is incorrect and whoever knowingly does so is committing a fraud.
Ipsen Due Diligence specializes in construction fraud to include detecting acts of misrepresentation, embezzlement, false or misleading invoices and speaks to the prevention and theft of material and equipment.