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Paying Employees in Cash Paying employees in cash is a long-used and common method of evading income and employment taxes. It is not illegal for a business to pay an employee in cash, but employment taxes are still owed on the payments. With no paper-trail, it is difficult, if not impossible, for the IRS to discover that a business is evading its employment tax responsibilities. Select one of the "Scams" detailed in the article and write a brief summary of how you would combat that scheme within your business setting. Respond to at least one of your classmates postings