It’s not a game. Every year your business is going to be audited and the formula is simple: Payroll times Net Rate gives you a premium.
So what happens if you try to lower your premium by underreporting your payroll? Well we could ask Vincente Sotto of Milpitas owner of Vincent Sotto landscaping but he’s probably a little busy right now.
The feds popped him for employment tax, and Workers’ Compensation fraud. According to the Santa Clara County District Attorney’s Office, Sotto allegedly underreported the wages he paid out so that his Workers’ Compensation Premiums would be 85K less over the period between 2007 and 2011.
There are a couple of problems with this. First of all…wait for it… it’s illegal as Mr. Sotto is now finding out but, had something happened his workers would not have had the proper coverage. That’s not right.
So now he’s looking at seven employment tax violation felonies as well as four other felonies for Workers’ Compensation insurance fraud. That’s eleven felonies for those of you scoring at home. We’re talking a possible 13 years in the stir plus a repayment of the shorted money.
At Leaders Choice we understand that it’s important to keep your workers compensation costs as low as possible but there are other ways. Legal ways. Maybe he could have looked at his classifications to see if he was overpaying on certain workers.
For example he might have been paying the tree-trimming rate on employees who just tended lawns. He should have talked to a knowledgeable professional to see what could be done but he didn’t. So now he’s looking at possible jail time. Did I just turn this into a morality play? Yes I did. But that doesn’t make it less true. Contact us. In most cases we can save you money on your premium… legally.