Targeting taxes lost to Philadelphia’s underground economy

One of the benefits of working “under the table” is avoiding taxes.  One Philadelphia City Councilman, however, is going after both legal and illegal ways people are avoiding the tax collector.

Councilman James Kenney says too many businesses and individuals in Philadelphia have found ways to skirt paying their fair share of city taxes.

“Some of these industries include the construction industry, which pays some of their employees in cash or makes them private contractors and issues them a 1099 with their paycheck,” Kenney said. “Those folks are responsible for paying the wage tax which many times they don’t.”

It’s far easier to have employers withhold wage taxes than for the city to chase independent contractors.

Kenney said he is considering a bill to enlist the private sector to help track down and collect outstanding taxes.

“Hire a forensic auditing team full of ex- or retired IRS agents and let them loose, and they will find it,” he said.

The move could recover millions of dollars for Philadelphia, Kenney said. Auditors could be paid by keeping a percentage of what they recover, he suggested.

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