News Detail

Construction Industry Tax Fraud Costs Taxpayers $2.6 Billion Annually

A new estimate from Smart Cities Prevail finds that 1.2 million construction workers are paid off the books each year.  Another 300,000 are misclassified as independent contractors when they are really employees.  These unlawful practices cost state and federal taxpayers at least $2.6 billion annually in lost federal income and employment taxes, and state income taxes. 

SWACCA strongly supports efforts to curb employee misclassification and off-the-books payment schemes in the construction industry.  These fraudulent practices create an unlevel playing field for legitimate employers at the expense of United States taxpayers.

 The United Brotherhood of Carpenters (UBC) has announced that UBC affiliates in the United States and Canada are planning Days of Action for April 15th to shine a spotlight on employee misclassification and related tax fraud.  A related UBC press release sums up the issue:

Many construction employers on all types of projects, including taxpayer-funded work, are not properly withholding or paying income or employment taxes for their workers. In the process, workers have their wages stolen, job sites are less safe and insurers are shorted of workers’ compensation premiums. Most of the fraud comes when workers are paid off-the-books by shady subcontractors and labor brokers, who are hired by contractors to underbid law-abiding businesses.

 “It’s extremely difficult to compete with unscrupulous contractors that misclassify employees as independent contractors or pay employees off the books,” said Matt Townsend, SWACCA President and CEO of OCP Contractors in Ohio.  “Holding illegitimate contractors accountable benefits the entire industry, workers and legitimate contractors alike. 

 For more information on construction industry tax fraud visit

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