In the 1980s, right after I graduated from veterinary school, I borrowed a pile of dough at 11 percent and bought a big practice. The previous owner was a great old guy. He shared two pieces of advice with me about what I had to do to keep labor costs under control.

First, he said, anybody who wasn't a veterinarian was really a bookkeeper. Second, any veterinarian who wasn't full time was almost certainly an independent contractor.

If I hadn't already been a lawyer at the time, I might have been confused by those suggestions. However, I understood exactly what he meant. What doc was suggesting were guaranteed money-savers.

Regarding the bookkeeper recommendation, he was implying that I could cultivate huge savings if I listed all nondoctors as office workers for unemployment insurance purposes. Back then, the scheme probably would have worked out fine. Insurance carriers almost never conducted on-site audits. And if you did happen to get caught, all they were likely to do was to throw you into the state insurance fund pool for a couple of years.

The small increase in premiums from a trip to the pool would be minimal. Especially compared with the giant premium savings accrued after years of categorizing technicians and assistants as workers whose biggest workplace hazard might be a paper cut.

And the independent contractor ruse? Another big money-saver. If you called part-time veterinarians (we had plenty in those years) "independent contractors," your practice could avoid paying Social Security payroll tax on them. You could probably skip unemployment insurance premiums and workers' compensation payments on their behalf as well. What a deal! All you had to do was print out a 1099 form for part-time doctors and you could save an instant 10 percent to 30 percent.

But woe is me. After years of knowing I've never been able to get away with anything my whole life, and of course, being an inherently honest guy in general, I elected to call a technician a technician and pay the freight on all part-time doctors.

It's expensive being honest.

Uncle Sam is watching

Fast-forward to 2011. Today you don't have to be a goody two-shoes to justify full compliance with payroll-tax laws—you just need a desire to stay out of prison. Payroll-tax enforcement has gone from spotty and sporadic to software-based and space age. Today, if you're inclined to cheat, you barely stand a chance. Let me give you an example of just how Big Brother has grown in tax enforcement with an example from healthcare:

My son recently moved from New York to Massachusetts after graduating from college. He hadn't been with his company long enough at the time of the move to qualify for its health insurance program, so we kept him on our policy for a few months under COBRA (until his probationary period ended and he had his own). When he went to file his 2010 Massachusetts income tax return, the state would not accept it without a stiff penalty unless he included information about where his health insurance had come from during tax year 2010. The state wanted the name of the company, his policy number and the Federal tax ID number of the company providing the coverage. The moral of this story is: As inquisitive as 21st century government is, don't even think about trying to cheat on employee payroll taxes or workers' compensation insurance.