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That makes a lot of sense. If individuals are committing criminal acts by hiring illegals and are exploiting desperate 3rd world people, why on earth would they have any integrity what so ever and give any taxes they take out of the illegals they are employing to the government. Its like expecting a criminal to obey a gun free zone sign on a building.
Because they don't want to attract more attention to their business. You may not know it, but the IRS had software that checks for red flags. One of these is lack of payment of withholding on reported W-2s. Employers create fake employment forms and submit them to the IRS as part of business. The IRS knows pretty much how much the firm should pay as part of withholding (not to mention payroll). Failure to do this will bring up a red flag. Now, why would a firm that's trying to avoid attention want to do something that will likely get them audited?