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Tennessee Slaughterhouse Caught Using 104 Illegal Ghost Employees to Avoid Payroll Taxes

Payroll taxes account for roughly one-third of U.S. federal revenue — approximately $1.23 trillion. Unfortunately, across the country, individuals and organizations alike attempt to take advantage of the payroll tax process and earn extra money in fraudulent ways.

Payroll taxes are imposed on employers (and employees) and are typically calculated as a percentage of the salaries that employers pay their staff. These taxes generally fall into two categories: taxes paid by the employer based on the employee’s wages and deductions from an employee’s wages.

According to The Daily Caller, a Tennessee slaughterhouse owner avoided paying $1.3 million in federal payroll taxes over the last 10 years. James Brantley, 61, owner of Southeastern Provision, pleaded guilty to various tax fraud charges as well as hiring illegal immigrants to avoid making payroll taxes.

Brantley initially reported to the Internal Revenue Service (IRS) that he had 44 wage-earning employees, but IRS officials who searched the facilities found 104 unauthorized workers.

“Many of these people were held without bond,” U.S. District Judge Ronnie Greer said about the unauthorized workers. “Most of them have already served a period of four to six months in jail they most likely would not have served.”

Brantley could face up to six months in prison for hiring the illegal immigrants along with a fine of no more than $3,000 for each unauthorized worker.

Though hiring illegal workers for a southern slaughterhouse isn’t exactly the most common form of payroll tax fraud, having ghost employees on the payroll system is actually quite common. Here are a few additional forms of payroll tax fraud:

  1. Timesheet Fraud — An employee logs in for hours that were not actually worked.
  2. Commission Fraud — The fraud is performed by field agents who are appointed on the commission basis. They increase their sales number in the system in order to earn higher commissions.
  3. No Deductions — An employee who has access to the payroll system can adjust their checks to avoid paying authorized deductions.
  4. Miss-Classification of Employees — This type of fraud is typically carried out by superior managers and can even happen accidentally. This takes place when managers classify a full-time, salaried employee as an independent contractor to evade payroll taxes and insurance payments.