My Friends Employer Doesnt Take Out Taxes, and he never payed any, now he is looking for a new job!!

My friend works at a place, and they never take out taxes i.e. so he technically doesn't work there (they pay them under the table)... now he is quitting that job, and going to another. He has to use that as a previous employer as to not have a gap in employment. How can he get around getting in trouble, or does it not matter for resume sake.

Thanks

I wonder if the employer would be too worried and refuse to admit that he worked there. Could that happen, or wouldn't the employer have to admit that the worked there?

VERY unlikely to matter on a resume. The only snag I could imagine would be if a potential employer asked for a copy of a pay stub to verify prior salary.

If this guy has been paying under the counter, and has no records, yes, technically, your friend never worked there legally!!! AND the employer doesn't have to admit the friend ever worked there! If he hasn't already filled out an application for another job - my advise is to keep his mouth shut! He can always say, he's been looking for a job here and there for something he really wanted to do! The friend wouldn't get into to trouble if all this came to light, but the employer would! Did he get paid by check or by cash!? There's no way to trace anything when it's paid by cash!

Job could be a problem.
IRS, problem.
Did not pay into social security or unemployment.
Hurt yourself when you work for cash.
When we hire a FULL background is done, no gaps.
If past employer will not respond it raises a red flag to us.

Shouldn't make a difference for a resume - especially if the former employer can give a reference.

for resume sake,its no big deal. but if down the road he has to file for unemployment,the $hit will hit the fan.

There are two issues here--the resume issue and the tax issue. You need to keep them separate.

First, the tax issue: If your friend was paid by a check every week with no tax withholding, this is not necessarily against the rules as long as your friend was an "indepedent contractor" and not an employee. Whether your friend was an employee will depend typically on whether he was required to show up and work a certain number of hours, as opposed to being paid based on a completed job (like a housepainter who is paid a fixed amount based on a fully-painted house and not by the hour).

If your friend was being paid like a typical employee (by the hour), then it is likely the employer is guilty of tax fraud because employers are required to withhold and pay income and employment taxes on employees. If your friend was an independent contractor, he needs to file self-employment taxes. Otherwise he is in a lot of trouble with the IRS.

All of this, however, has nothing to do with the "gap" in employment on his resume. He can account for that time because he was doing something. If he was not a true employee, he can still say he was an independent contractor. If he was an employee and the employer was the one committing fraud, then this is of no importance to your friend's resume. Keep in mind that if the employer won't admit to the employment relationship, your friend can always blow the whistle to the IRS.

In the end, your friend owes income taxes. There is no way around that.