A lot of construction is happening in ever-growing Austin. The industry is highly competitive and projects are frequently awarded based on the lowest bid. One of the ways to lower the bid is to cut labor costs.

Jason Engels, the executive secretary-treasurer at Central South Carpenters Regional Council, joined Studio 512 Co-Host Stephanie Gilbert to talk about how companies might be doing that, but unfortunately in a fraudulent way.

What is tax fraud and how does it reduce labor costs?

“Tax fraud is the intentional misclassification of employees as independent contractors. It often involves paying employees unreported compensation either by check or in cash. It’s part of an underground economy with the intent to keep expenses hidden from the federal & state government, workers’ compensation, etc.”

I’m not in construction, why should I be concerned?

“Construction industry tax fraud affects everyone. A recent study on the monetary effects of worker misclassification by The Berkeley Labor Center shows that 46% of construction worker families in Texas rely on federal programs such as Medicaid and food stamps to make ends meet. Plus, Texas companies are getting out of paying $1.06 billion dollars in federal taxes annually. Which is used to fund schools, pay for public safety, protect our country, and pay for infrastructure.”

How widespread is it?

“In the construction industry alone, 12-20% or 1.3-2.16 million workers were misclassified as 1099 independent subcontractors or paid off the books, based on a 2020 national study of fraud in the construction industry. We have seen this practice on major projects, such as bridges, roads, schools & universities, healthcare facilities, and commercial building projects.”

“Our goal is to spread the word about tax fraud so others will join in the fight against this commonplace and dishonest practice. We think the best way to put an end to tax fraud is to create serious enforcement mechanisms and legislative changes to ensure workers are treated fairly and dishonest contractors no longer have a competitive edge at the expense of the workforce.”

Where can people go to learn more?

“On April 12, 2022, members of the Central South Carpenters Regional Council will participate in a ‘Standing Up to Tax Fraud’ Days of Action event in Austin, TX at the Austin City Hall Plaza from 11:30 a.m. – 12:30 p.m.

Learn more at StopTaxFraud.net.

This segment is paid for by Central South Carpenters Regional Council and is intended as an advertisement. Opinions expressed by the guest(s) on this program are solely those of the guest(s) and are not endorsed by this television station.