By Rabbi Yair Hoffman for 5tjt.com

It is unfortunate but much of the economy, especially after COVID –  is now “off-the-books.”  What follows are five reasons why these actions should be avoided – from a halachic perspective, from a patriotic and legal perspective, and thirdly – from a business perspective.  The reasons to avoid it are listed below.  Some of the reasons are truly eye-opening.  Those that are interested solely in the business perspective should skip to the last one.

1. The ruling of the mechaber in Shulchan Aruch (CM 369:6) is that one must pay taxes to the government in which one resides. The Ramah agrees with this ruling, but qualifies the end result as hafkaas halvaso if he incorrectly did not pay tax – rather than gezel.  The Gra in note 23 argues slightly with the Ramah’s reading of the Ran.
2. Rav Yisroel Belsky zt”l on 22^nd of Sivan 5764 ruled that when a business pays employees off the books, it is a violation of Lifnei Iver [cited in Misguiding the Perplexed: The Laws of Lifnei Iver p. 153 note 192]
3. A business that pays off the books has not been deducting worker’s compensation, unemployment insurance, or disability. These are required by the law (See Workers’ Compensation Law §§ 50, 209(4); Unemployment Insurance Law § 560, et seq.)
4. Even though the employee has not paid taxes, he or she can still report the business to four different agencies: 1] the US Department of Labor 2] the New York State Department of Labor. (Both of the above agencies can audit the business and impose some serious fines and penalties) 3] the IRS 4] the New York State Department of Taxation (due to a failure in both withholding and paying required taxes to each of these two agencies. Employers are required to pay both state and federal taxes. Failure to do so can bring some hefty fines and penalties. This is all aside from other enforcement actions.
5. All of these reasons can also develop into a huge Chillul Hashem.
6. If the top five did not convince you, the last one might. Of late, there are allegations that a number of workers have been filing lawsuits against their employers who have paid them in cash claiming that they did not receive any of the cash payments.   If they can prove that they worked there with the mandatory sign-in cards and the employer has no record of paying them the excess since he did so in cash– they can successfully sue.  They can then possibly move on to other employers and easily receive other employment because workers are so scarce these days.

And while it is true that most of these problems exist in restaurants and food establishment, it is nonetheless a very serious issue for any business.  One employer was sued to the tune of a half a million dollars because of this mistake that he had made. Let’s also remember, however, that we are here to be mekadaish shaim shamayim – not the opposite.

The author can be reached at [email protected]