VALPARAISO—Local carpenters are rallying in Valparaiso, IN, to call attention to the growing problem of employer tax fraud in the construction industry. Carpenters throughout the United States and Canada will also hold various events to protest fraud in the construction industry.
“It’s a question of fairness,” said Executive Secretary-Treasurer Matt McGriff, Central Midwest
Carpenters. “As taxpayers prepare to file their returns, we stand up against unlawful
practices that have been business-as-usual among construction employers for too long. Consequently, taxpayers lose government services, and law-abiding businesses and their employees
lose work to the unlawful contractors.”
Construction employer tax fraud hurts everyone. Workers are paid off the books or
intentionally misclassified as independent contractors by shady subcontractors and labor
brokers whom contractors hire to underbid law-abiding businesses. Fraud happens on all
types of projects, including taxpayer-funded construction. Rampant cheating causes a massive
loss of revenue and makes it difficult to repair roads, bridges, and schools, care for veterans, and
shore up Medicare and Social Security.
It is even more urgent to address the employer tax fraud crisis as public projects funded by the
Bipartisan Infrastructure Law, as well as the construction of massive clean energy and
semiconductor facilities continue to ramp up.
Attracting and retaining a skilled workforce to staff these projects will be helped by a final rule
enacted in March by the U.S. Department of Labor, which addresses how to determine whether
a worker is properly classified as an employee or an independent contractor under the law. The
rule reinstates decades of settled law and protects both workers and law-abiding
employers.
The consequences are dire for working families affected by employer tax fraud. The University
of California-Berkeley Labor Center found that 39 percent of construction worker families
nationwide are forced to enroll in one or more safety net programs to make ends meet. That is
higher than the 31 percent of all workers enrolled in such programs. The yearly cost to state
and federal governments is a staggering $28 billion. Researchers attribute their findings to low
pay, wage theft, and illegal employment practices in the construction industry.
A study of the overall construction industry tax fraud epidemic shows that it costs U.S.
taxpayers more than $10 billion a year. Some 1.1 to 2.1 million construction workers are paid
off the books or misclassified as independent contractors when they are really employees.
It is estimated that in the state of Indiana only, the cost of tax fraud business practices to
taxpayers are over $140 million.
Tax fraud and workers’ compensation premium fraud have reached alarming levels in the
construction industry that the U.S. Department of the Treasury’s Financial Crimes Enforcement
Network notified banks, check cashing stores, and other financial institutions that they must
report the suspicious transactions of construction contractors.
Scores of Days of Action events are being held throughout the U.S. and Canada April 13 – 19.
Visit StopTaxFraud.net/StandUp for more information.
