Reasons Why People Use Fake Pay Stubs and the Penalties That Can Come With It
Even after the IRS being in place, many people have been working off the books to avoid paying taxes. However, operating like this can be significantly costly especially for the people who do not make a lot of money.
One of the most significant causes of people use fake pay stubs is when they need to obtain a loan. This is because lenders will want to know whether a particular person can pay back the loan by finding out how much they make every month. A person can make a fake paystub to ensure that they have an income even when they don’t just so that they can get the loan. The penalties that are associated with this once discovered can total up to more than $1 million and you could even face jail time.
Some people also make fake pay stubs so that they can get some benefits that they are not entitled to acquire, from different institutions such as the government or an insurance company. However, one should recognize that the risk associated with scamming is not worth it because of the enormous fines that will need to be paid if they are caught. A company that sells fake pay stubs online is usually looking to make an income out of disparate people who need money fast. If the company that makes such pay stubs is found, you could also be tracked down as someone who was involved in the fraud.
As an employer, you should ensure that you do not work with an accountant who suggests that you use fake pay stubs. The accountant who you hire should be one who enables you to operate legitimately in your company. If you have an accountant managing your finances, they should suggest that your employer hires you as a W-2 employee or creates 1099 if you’re currently being paid in cash. The only situation where you may use fake pay stubs is when estimating your taxes and calculating your earnings, but you should never use them for legal purposes.
Employers also create fake pay stubs to avoid paying taxes as they should. An employer can also do this when they are running a front operation for another kind of activity that might be illegal. If you suspect such issues, you need to get an employment lawyer who can give you advice on what to do.
If you’re running a small business, fake paystubs can get you in a place where you need to hire lawyers unnecessarily when you get on the wrong side of the law. It is also possible that employees could be falsely accounting for labor costs that will cause a loss for you. It is also possible for employees to lose their trust in you if they discover that their pay stubs are fake, and they will feel that you don’t value them.