The company has to pay X amount of dollars in taxes. Not just Federal and State but other taxes as well. So if they are claiming they paid less they would not be paying as much tax. Not the right thing to do at all. Just remember though, if they report every penny they paid to the employee, it may put that employee in a higher tax bracket which would make that employee owe more taxes also. This is not scrupulous and it is not fair to the companies that do report their earnings correctly. I hate carrying the extra load for the companies that dont do things the right way.