2021 was the year after huge job losses in the United States. Companies are hiring in all different fields. With so many people in need of a new job, competition is increasing. Businesses are going to be choosier when it comes to their hiring process. It is also the time to avoid tax fraud. You’d be surprised that taxes an employee failed to pay may come back to the company that hires them. One way to avoid this is to run a background check for employment. Read below for the benefits of running background checks and how they can help you avoid tax fraud.
Of course running a background check on prospective employees will provide information on their criminal records. Not only will it show you whether or not the person has been convicted of a crime, it will alert you if they are on the sex offender list. Background checks even give you court documents that are both criminal and civil. When you are looking for high-quality employees, a background check will facilitate the process by determining their criminal history and more.
Education & Employment Verification
In addition to providing the candidate’s address and name history, a lot of people don’t know that you can verify the candidate’s education and employment verification with a background check. The check will show you if they graduated from their college and if they worked where they said they worked. More than that, you’ll be able to see what they majored in and if they earned the degree. You’ll even be able to find out their GPA and other information. The report will tell you what positions they have had, why they left, and if they’re eligible for rehire. This information is invaluable when it comes to hiring new employees.
Workers’ Compensation & Financial Information
Background checks will offer the ability to see if they were compensated for a work injury or leave period. Workers comp will lead to complicated taxes. Furthermore, reports on background checks show you the financial information that may be pertinent to the job, wages, and taxes, which can lead to various forms of tax fraud that can be negligent or intentional.
Forms of Tax Fraud
Tax fraud is when someone or a business entity willfully or unintentionally leaves out relevant information that would lead to them having to pay more taxes. This can be a lie but it can also be negligent. If an employee is dishonest about their taxes and you hire them, your company can end up picking up the tab. Tax fraud comes in all kinds of forms depending on transgression.
Deliberately underreporting or leaving out taxable income is probably the most common form of tax fraud. Overstating deduction amounts and keeping two sets of financial records are also common. Claiming personal expenses as business expenses and false deductions are others. Finally concealing or transferring assets or taxable income and making false entries in your records can lead to tax fraud.
There are also many forms of tax negligence. Failing to report all the income is a form of negligence, whether it’s underreported or not reported at all. You can also overvalue non-cash donations that you’ve given to charity. Prospective employees inflating the value of other federal deductions is negligence. White lies and unintentional omissions can all be forms of tax negligence. Whatever form of negligence the person does, it will lead to the business taking on tax fraud.
As your company hires more employees throughout the year, you will incur taxes that you aren’t aware of in the form of fraud. If you take the time to run background checks on each prospective employee, you will not only have the chance to find the most hard-working and earnest people. You will be able to avoid tax fraud by finding out whether or not the person has kept up with their taxes.
The pandemic is far from over, but companies around the country need to hire new employees. When hiring, you need to be careful to find the best person for the job while avoiding complications like tax fraud. However you look at it, running a background check will only benefit you and your business.