The federal government has announced a partnership with Florida state officials to begin cracking down on the widespread use of a tax evasion scheme by construction companies throughout the state.
According to a report from the Miami Herald, which uncovered much of the corrupt dealings during a year-long investigation published in September, the U.S. Department of Labor is partnering with the Florida Department of Revenue to stop “worker misclassification” schemes before they cheats the state out of any more tax money.
The paper defines the scheme as “when companies treat their workers as independent contractors instead of permanent employees.” When they classify these workers to the state in this way, the companies are able to avoid withholding income tax or filing payroll taxes for them. The Herald reports that contractors can save 20 percent or more in labor costs with the scheme which gives them an unfair advantage when bidding for projects.
To crack down, Florida officials will “share information and coordinate law enforcement activities with the Department of Labor.”
A McClatchy Newspapers analysis found that the scheme amounts to $400 million in lost tax revenues in Florida alone. The DoL has also made partnerships in 16 other states to crack down on the practice.