I’ve heard many times that cash is king. Well, that’s not always the case as Leroy Felt, Jr. discovered.
Mr. Felt was the owner of Woody’s Construction in Margate, Florida. He decided to pay his employees in cash. That’s absolutely legal…as long as you make all the necessary payroll deductions. Mr. Felt had a better idea.
He wrote corporate checks to various companies and individuals. They, in turn, gave Mr. Felt the cash (less a small fee kept for the service). Mr. Felt then used the cash to pay his employees. Mr. Felt thought he didn’t need to worry about those pesky payroll taxes.
The government doesn’t like it when you violate trust fund taxes. People who do so end up in prison when they’re caught and they end up paying the tax plus penalties and interest. Mr. Felt got caught, pleaded guilty, and was sentenced to ClubFed for four years.
Paying people under the table is a bad idea. If you get caught it’s almost a certainty that ClubFed is in your future.