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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I recently won a case against my former employer for not paying

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I recently won a case against my former employer for not paying overtime wages. She has never paid an employee overtime rates since the start of her business over 32 years ago. Would this be considered any type of tax fraud against her in the state of Ca. or to the IRS? Also, if a company is licensed in one city but also does work in surrounding cities, is said company required to have a license in each city where work is performed?

LEV :

Hi and welcome to Just Answer!


Would this be considered any type of tax fraud against her in the state of Ca. or to the IRS?
Not paying overtime wages is a violation of employment laws - federal and your state law - but is not a violation of the tax law - so that is not a tax fraud.
The tax fraud -- a willful act done with the intent to avoid tax liability and defraud the IRS or your state taxing authorities.
Unless there are other consequences - I do not see the tax fraud event based on your information.


Also, if a company is licensed in one city but also does work in surrounding cities, is said company required to have a license in each city where work is performed?


That is possible – but is based on each city’s ordinance and the type of business. Because regulations are different in each locality – you may simply contact city’s officials and verify if any specific business activity requires a license.
See for reference - http://www.business.ca.gov/StartaBusiness/RegisteringaBusiness/Locallicensesandpermits.aspx

LEV :

Alternatively - you may enter the city name and the type of the business - and verify if the license is needed - use this link - http://www.sba.gov/licenses-and-permits/.
If thw license is required - that would be a violation of that city laws.

Customer:

So what exactly is the employer liable for concerning not paying overtime wages to other employees?

LEV :

That is a violation of employment laws - both federal and California - not the Tax law.
The employer will be liable to pay back wages. However the liability is usually limited by three years. In additional - the employer will pay employer's portion of FICA taxes on these wages.


The exact amount is determined in negotiation or if there is no agreement – in the court.
I suggest to consult with an attorney specialized in employment laws for exact amount you may claim. You may also ask a separate question in the employment law section if you need details how the amount of compensation is determined.

Customer:

How would I phrase this...Would the employer be responsible for not paying proper taxes if they weren't paying overtime wages to employees?

LEV :

You may say this way. But the employment tax liability is determined based on wages that were actually paid and based on when they were paid.
If wages were not paid – regardless of the reason - there is no employment tax liability - so there is no tax law violation.
Sorry if you expected differently.

Customer:
Lev and 3 other Tax Specialists are ready to help you