The New Age of Cashless “Unaccountability”
It’s probably accurate to say “My Injured Worker is a terrible accountant,” and this used to not matter. Today, it matters a whole lot. Here’s why…
As recently as 2018, most people starting a small (or “gig”) business had a significant barrier to entry — a little thing called “business accounting practices.” Back in those olden days three years ago, in order to process credit cards a business owner had to establish a banking relationship based on credit ratings and good tax standing with the state. They then could establish a merchant account in addition to their regular banking, and the merchant account was the mechanism for processing credit cards. Typically, in order to maintain their accounts, they needed to file taxes and remain in good standing with taxation authorities.
Fast forward to today, and Gig workers as well as new small businesses can send and receive payments using cyber currencies that connect with their personal bank accounts. Many Gig workers don’t even have an business tax ID number, nor do they know that they even need to incorporate!
Why does this matter? It makes the work and payment for work “not very traceable.” The IRS considers cyber currency transactions that take place on apps like Venmo and CashApp to be ‘cash transactions’, relying on the recipients of payment to file their taxes accordingly. However, in a scenario where there is virtually no penalty (IE: loss of a merchant/business bank account) for not filing taxes, it’s not surprising that most do not file. Therefore, there is no official record of the work or payment for work.
Now consider that an employee of a general contractor, for instance, has a side hustle as a landscaper and receives all payments by CashApp. This worker injures his knee on a landscaping gig while removing a tree and reports an injury at his GC job on Monday morning and claims a knee injury. How does the general contractor employer demonstrate that the accident happened during a gig in a side economy and how does he determine an accurate average weekly wage benefit with no time cards or proof revenue for side work?
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