A California concrete company owes hundreds of thousands of dollars in payroll taxes, according to state authorities. T.B. Concrete Inc.'s chief executive, Thomas Bernhardt, and his wife Rachel Bernhardt, the company's office manager, are accused of 15 felony counts of payroll tax evasion and workers' compensation insurance fraud. Both are free on bail.
Orange County tax attorneys note that the Granite Bay company is accused of owing the state $230,000 in back taxes. State authorities say the Bernhardts submitted false payroll reports and misrepresented the status of employees as independent contractors.
The Employment Development Department, the state agency that collects payroll taxes, and the Department of Insurance concluded that the Bernhardts intentionally under-reported wages by disguising the funds as payments made to independent contractors in order to illegally reduce the company's state payroll tax and workers' compensation expenses.
The company's workers should have been classified as employees, and their wages should have been reported in full to the state and the company's insurance carrier, according to law enforcement authorities.
The charges say the Bernhardts misrepresented workers' job classifications in order to reduce workers' comp premiums. For example, some concrete workers were classified as clerical workers. Because of the misclassification, the workers may have trouble obtaining benefits if they are injured on the job. The under-reporting and misclassification cost the workers' compensation fund over $175,000.
An investigation found that from 2004 through 2009, T.B. Concrete under-reported the wages of 111 workers by $2.1 million, approximately 85 percent of the company's payroll.
Attorney General Edmund Brown, said, "This company cheated the state out of hundreds of thousands of dollars in taxes and workers' compensation premiums by submitting phony data and disguising wages as payments to independent contractors."
Source: Central Valley Business Times "Granite Bay business owners accused of tax evasion and insurance fraud" 11/30/2010