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You think they actually claim them as deductions now? They just pay them cash, and are thus free from minimum wage, SSI, Unemployment, Medicaid and Medicare contributions, and if they try to unionize or even complain about conditions, just call ICE. As for government oversight, they don’t oversee much.

Has to be criminal punishments.

They try to claim the deductions.

Thus all the IRS Form 1099 filing requirements relating to independent contractors.

You think they actually claim them as deductions now? They just pay them cash, and are thus free from minimum wage, SSI, Unemployment, Medicaid and Medicare contributions, and if they try to unionize or even complain about conditions, just call ICE. As for government oversight, they don’t oversee much.

Money paid to employees/contractors is deductible as a business expense. Sure, they can pay cash and save a bunch of $$ on various fees and taxes, maybe worth more than the tax deduction. But, if they can still book them as 'contractors' and deduct those payments, you save even more $$.

The IRS knows a LOT. A couple simple solutions on their end would be:
- Investigate EVERY SSN used to file taxes when that person is under the age of 15 (Hell, do 15-18 once the young'uns are done!). They know the date the SSN was issued, and it's rare for young teens to have a job. Especially one that pays more than $10M or $15M a year.
- Investigate EVERY SSN that has significant multiple incomes from multiple states. Sure, some people legitimately might get paid from different places constantly, but most people that travel for work still get paid from the same central place.
- Verify/investigate every non-SSN non-business entity TINs. I'm not sure what all documents are generally required for them, but that seems another good potential place to hit after the above two.