I found a recent article about an owner of a landscaping business in Maryland that was accused of falsifying payroll records to pay less on insurance and taxes. According to the article, the landscaper failed to report pay to 39 workers and overtime pay during a three-year period. This resulted in the landscaping business underpaying their workers’ compensation carrier by 51,850 dollars. It also caused the business to not withhold 40,400 dollars in state income tax and underpay the Executive Office of Labor and Workforce Development’s Division of Unemployment Assistance an additional 32,800 dollars.

This tax and insurance fraud was discovered by an auditor for the landscaper’s workers’ compensation insurance carrier. The auditor discovered corporate tax returns that were filed by the owner for nearly 400,000 dollars in payment to subcontractors that were not disclosed during the audit. This was coupled with an insurance claim by one of the 39 employees that were not listed on the payroll. The Insurance Fraud Bureau of Massachusetts then began their investigation of the company.

The owner of the landscaping business has been charged with 10 counts of unemployment fraud, 31 counts of failure to withhold state income tax, three counts of workers’ compensation fraud, and three counts of larceny. I know from experience that this is not a solitary example of insurance fraud and that this happens very frequently. I will do more research and write another article in the next few days about the impact that insurance fraud has on insurance premiums paid by your business.

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