I'll try to combine the facts to make it short....
The owner of the co. I work for is fully retiring...
The gentleman that is taking over ownership has previously had problems with the I.R.S. Now he is trying to pay his employees by cash. He says he has it set up where he is going to be taking taxes out and paying them himself , he will issue computer printed statements to employees.The money is set up in some Trust account and he is responsible for it. Is this legal??
I have done some investigating and something just don't seem right? Anyone have an idea?

any payment in cash without a chckstub or proof that taxes are being paid is illegal just call the irs and find out 4 sure

it doesn't sound right to me.

Sounds to me like he might be taking taxes out and paying them TO HIMSELF. Anyone can create a fake computer statement. I would be very very leary of this.

dont trust him my ex worked for a guy like that took out the money for taxes out of ex's cash and never paid it its just another way to get over on his employees good luck if u do go along w it keep a log of ur pay b4 and after taxes every week and have him sign it stating that hes resp for paying them that it was deducted from ur pay and also get a notarized statement w all the terms b4 u allow him to take any money for " taxes" (probally his beer money)

Well I hav an Accounting degree and work at a CPA firm. I keep books and do payroll for over 25 companies. So..he is or isn't going to withold your share of Social Security and Medicare? And what about Federal Withholding and State Withholding? And he is going to issue you a statement each payday....that will be similar to a check stub?
If he is doing all of that and just giving you your net pay in cash instead of check form.....there should be no issues. Please correct me if I have gotten any of the details incorrect.

Unfornutalety it is legal if he 10-99's, if he isn't then Phxlilly might be right.

Any employer can w/ hold taxes from your pay as they are supposed to and then choose not to pay them in.....It is against the law but as long as you have the statements to prove that they were withheld, the IRS will go after the employer to pay the money in not you!

Silent...she said he was going to hold the taxes out...that's not a 1099 contract.

oops, I missed that part. Yeah it sounds like he is paying his IRS debt with employee taxes...not cool.

That's no skin off her back as long as she is getting proof that is is withholding them from her check! Because he will still have to provide her with a w-2 that will have to match her paystubs...that will show what was withheld and the IRS will honor that on her side and go after him for any empoyment taxes he did not pay in.......

exactly

Why don't he contract with a Professional Employment Organization (PEO), also known as leasing company and then all he has to do is pay his one line statement to the PEO and don't have mess with administrative liability or employee accounting. t would solve everyones issues.

because he is a dumbass

Shadow...I don't think he is offering to do that...I've kind of been waiting for Dawnette to reply so I can get a bit more detail. It does seem wierd to me that he wants to pay in cash ..but as long as she has the right taxes withheld and get a pay stub or statement w/ each check it seems ok. But like I said I've been kind of waiting for more detail from her.....

The way she is describing it is that hes trying not to let the IRS interfere with his accounting cause he is either scared of audits or still has issues. Either way if the money don't get put in it is trouble for everone even though he is the one that will get in trouble. I wouldn't trust the IRS to give the employee credit for any input until they collect. In a perfect honest moral world I think cash would work fine too.

Actually Shadow...if you don't receive a w-2 you file a form 4852 and with it you send your last paystub that shows what taxes have been held out year to date...and you do get credit for paying them! I have filed them for numerous client.

You would be amazed how many employer do not pay their payroll taxes....it happens all the time!

Cool 1 point for the IRS

Well the IRS gets their money by freezing the bank accounts and any liquidable assets of the employer....He is forced to pay at that point....But that's a whole different subject!