Question
Is this considered embezzlement or tax fraud?
My employer has a few people on the payroll that don't even work here... instead, they're maintaining her privately owned home and acreage in the countryside. Also, spring water is delivered there, and a service fertilizes her lawn, all of which is billed to the company as if that was a business location. This is illegal, right? What specific laws are being broken?
6 months ago - 5 answers
Best Answer
Chosen by Asker
If your employer is claiming personal expenses as business expenses on her tax return she is breaking the law. However just having the personal bills paid with company funds may just be a very poor accounting practice. If she is considering those expenses as a draw there is no problem. But it is more likely that she is committing tax fraud.
by Mathew
6 months ago
Asker's Rating: 
Other Answers
None of that, on it's own, is illegal. There are many small business owners who merely have bad habits and mix up their business and personal expenses. That, by itself, is not illegal. *However*, if she is reporting, on her tax returns, these personal expenses as expenses to the business, then she is deliberately and knowingly misrepresenting her tax position, which is illegal. So, bottom line- it doesn't matter who's billed for the items, so long as on her tax return the expenses are kept separate. Good luck! :0)
by sumbumblebee- 6 months ago
It does not matter where the bills are sent as long as things are accounted for properly.
by Max Hoopla- 6 months ago
IF the employer is claiming that income as a draw (distribution) and reporting it, no laws are being broken. If the employer is not claiming the income, then he is under-reporting income on his personal taxes. That would be illegal. I think you have no way of knowing if he is or isn't.
by Chuckie O- 6 months ago
If your employer doesn't own the company, it's embezzlement. And in any case it's tax fraud.
by Judy- 6 months ago