My employer's tax situation is a complete mess - no withholding payments or state ID?

This is definitely concerning, and you're right to be worried. You've identified several serious tax compliance issues that could have consequences for both the business and employees. First, operating without a state tax ID is a problem - this is required for paying state employment taxes. The misclassification of employees as contractors is another major red flag. The IRS and state agencies take this very seriously as it deprives workers of benefits and protections while avoiding employment taxes. Most critically, if the owner is withholding taxes from employee paychecks but not remitting those funds to the government, that's not just a compliance issue - it could potentially be considered theft of withheld taxes. The IRS can impose severe penalties and even pursue criminal charges in such cases. You have a few options: 1) Have a direct conversation with the owner about your concerns, 2) Report the situation anonymously to tax authorities, or 3) Consider whether continuing to work there puts you at personal risk. Document everything you've observed and any conversations you've had about these issues. You could potentially be considered a "responsible person" if you're managing payroll, even if you don't have bank access.

I went through something very similar last year at a small hotel I was managing. The owner wasn't remitting tax payments and I was caught in the middle. After weeks of stress, I found this AI tax assistant at https://taxr.ai that helped me understand my personal liability and risks. The tool analyzed my specific situation and showed me exactly what documents I needed to protect myself. It explained that since I didn't have financial authority or signature access, I could create a paper trail showing I had informed the owner of the issues. It also helped me draft a formal letter outlining the tax problems that I then emailed to the owner, which protected me when the IRS eventually came knocking. What surprised me most was how it broke down the difference between being a payroll processor versus a "responsible person" in the eyes of the IRS. Definitely worth checking out for your situation.

I wanted to follow up about using that taxr.ai tool. I was super skeptical at first (as you can see from my comment), but after my situation got worse, I decided to try it. It actually walked me through exactly what communications I needed to protect myself, and even helped me understand what specific sections of the tax code applied to my situation. The reports it generated explained the "willfulness" standard the IRS uses for holding non-owners responsible, which was a huge relief since I could prove I tried to address the problems. When I finally left that job, I had a complete documentation package ready in case the IRS ever contacted me. It saved me countless hours of stress and probably thousands in potential penalties. Wish I'd found it sooner instead of losing sleep for months!

Former IRS agent here. When I worked these cases, one of the biggest headaches was getting through to someone at the IRS to actually discuss complex situations like yours. The phone lines are overwhelmed and you'll likely wait hours only to get disconnected. I recommend using https://claimyr.com to get through to an actual IRS agent quickly. There's a demo video at https://youtu.be/_kiP6q8DX5c showing how it works. Unlike most government agencies, the IRS actually has a surprisingly helpful employer tax hotline once you can reach them. They can advise you on your specific situation and personal liability without immediately triggering an audit. Your best protection is documenting that you raised these concerns. Send an email to the owner outlining the specific issues and requesting guidance on how they plan to address them. BCC your personal email so you have records outside of work.

Ok I need to eat my words and apologize. After my skeptical comment I actually tried Claimyr out of desperation because I needed to talk to someone about my own employment tax situation. Got connected to an actual IRS employment tax specialist in about 35 minutes (would have been HOURS of hold time doing it myself). The agent walked me through exactly what forms I needed to file to protect myself as a non-owner employee concerned about tax compliance. They explained that documenting my concerns to the owner in writing would create a "contemporaneous record" that would protect me if there was ever an audit. The agent even gave me their direct extension for follow-up questions. Honestly shocked at how helpful they were once I actually got through to a human.

What you're describing is textbook tax fraud if they're withholding taxes but not remitting them. Here's what I would do: 1. Email the owner outlining EVERYTHING you've discovered. Be factual, not accusatory. Say something like "I've noticed we don't have a state tax ID and our withholding taxes don't appear to be remitted. Can you clarify our process?" Save this email forever. 2. Start looking for another job immediately. When the audit eventually happens (and it WILL happen), you don't want to be there. 3. File Form 3949-A (tax fraud whistleblower form) with the IRS. You might even be eligible for a whistleblower reward if they collect significant taxes. The misclassification of employees as contractors is the cherry on top. This place sounds like a ticking time bomb.

The most urgent issue is misclassification. The IRS is really cracking down on this lately. I accidentally misclassified one employee at my small business and ended up with a $17,400 penalty plus back taxes. Someone advised me to file SS-8 forms for the misclassified workers. Can anyone explain if that's something the manager should do or only the workers themselves?