The Losses Keep Mounting

More than $8.4 billion a year is lost to Construction Industry Tax Fraud! Watch the losses climb, from Jan. 1, 2017 to now. 

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Our company welcomes free, fair competition through transparency against payroll, tax fraud

By Ron Slaght

Diversified Construction Specialists (DCS)

DCS specializes in providing construction and interior delivery systems to a diverse range of clients across the Midwest. For decades, we have maintained a strong commitment to investing in our workforce. At DCS, we pay fair wages and benefits to attract and retain skilled, experienced, and certified construction workers. Highly trained and satisfied workers translate into great end products. Conversely, low-skilled, low-paid workers produce low quality products.

In the construction industry, whether the project is a school building or a bridge, low-skill and low quality can mean safety risks for everyone, and we are not willing to compromise on the safety of our workforce.

Additionally, we have found that our business model of investing in our workforce and creating good jobs also generates repeat customers. Time and time again, our customers see that we know how to solve their problems and build their solutions.

But we alone cannot solve the problem of tax fraud in the construction industry.

Tax fraud in the construction industry is pervasive, corrosive, and often sanctioned by a system that doesn’t even acknowledge, let alone punish, the businesses. Dishonest businesses cheat by misclassifying their workers as 1099 “independent contractors” and in so doing, those businesses avoid paying health care, payroll taxes, and workers compensation. As a result, their costs and their bids are fraudulently low.

When projects come up, and construction companies bid for those projects, it’s hard to compete against companies that are allowed to cheat the system. When companies cheat in this manner, the company essentially cuts their costs by 20, even 25 percent. 

DCS has lost business to companies that engage in this practice. We work with local school districts on their building and interior needs. Unfortunately, it is not uncommon for companies to submit bids for these types of projects with artificially low prices. More often than not, these bad actors are awarded the contract and misclassify their workers as independent contractors. They pay those workers low wages, and typically no health care or benefits. These companies do not pay workers compensation, so when their workers get hurt, they have no way to pay their medical bills. Hospitals and taxpayers get stuck with the cost. We see this all too often.

It is time our elected officials implement necessary reform, so that honest companies that play by the rules can thrive with fair competition. DCS can compete with anyone, but we need our elected officials to institute reform to ensure that competition is fair.