The Affordable Care Act had a provision requiring small business to issue a 1099 to every vendor with whom they spent over $600. This caused an outcry and the House passed a screwed up repeal provision, which the Senate will probably also approve.
Now that this odious regulatory burden is about to be lifted from the shoulders of small business, perhaps it’s time to mention a little fact that’s not often discussed–small businesses cheat on their taxes, a lot.
In the past few years, I’ve seen the following: A technology company owner who had his kids’ nanny on the payroll as an employee. A landlord using his business account to pay for supplies for a major home remodel. Numerous service providers who offer a discount for cash. And many, many SUV “company cars” driven by moms running errands.
There are plenty of small businessmen who pay their full honest share of taxes (I’m one of them), but let’s not pretend that the real reason that we’re repealing the 1099 provision of the ACA is “paperwork”. The ability to cheat on their taxes is just taken as a given by a lot of small businessmen. It’s sort of like the small business version of a farm subsidy.
cleek
Q: do you run your own business ?
christian mistermix
@cleek: A: Yes
Wilson Heath
The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.
Dennis SGMM
You’d think that with the hue and cry about deficit reduction a responsible Congress would be closing loopholes – not reopening them. A cynic might think some pols are more interested in slashing programs that they don’t like than in actually reducing the deficit.
Napoleon
The Dems are morons if they pass the “fix” in its current form for what it will do to health care reform.
Isn’t it something that we have a major political party that has an informal goal of enabling and shielding criminals who want to defraud the American public.
cleek
@christian mistermix:
and you are really OK with this 1099 thing?
cause, to me, it feels like a ridiculous waste of effort on everybody’s part.
Pococurante
@cleek: Agreed. Taxes are for the little people who don’t itemize.
Guster
@cleek: I’m a small business owner of the tiniest sort–I’m a writer–so this would annoy me, having to send a 1099 to the woman who built my website and another to the guy who did a book trailer for me. But it’s just two bits of paper. And for bigger small businesses, wouldn’t they just hit ‘export 1099s’ on Quicken or something, and listen to the printer hum for a while?
How hard would it really be?
Small Business Owner
I run a small business and this 1099 thing is a complete non-issue. I just turn over my files to my accountant and she sends out the paperwork.
Holy shit that was complicated. Oh noes!11!!!
Chyron HR
@christian mistermix:
And this small business… who runs it?
“I do.”
And what size is your business?
“It’s small.”
On the subject of the 1099 reporting requirements, I’m a CPA and from my perspective compliance would have legitimately been a pain in the ass for a lot of clients (and therefore a pain in my ass). I’m happy to see it go, even though I recognize that it served a legitimate purpose of trying to catch tax cheats.
Pococurante
@Guster: It’s not. Business owners expense sub-dollar receipts after all. And I agree – anyone business owner / independent contractor who is not using an electronic package on a weekly basis deserves to be buried in their own crap.
I’m with mix on this one.
christian mistermix
@Chyron HR: Yeah, it’s a PITA, but I already pay a bunch of money to get my taxes done and keep electronic records, so I really don’t care.
Comrade Javamanphil
@Wilson Heath: This is good information to know. I’m going to start at the top of the Fortune 500 and work my way down.
Pococurante
@Chyron HR: Aren’t you paid for your time? You stated “clients” in plural so unless you charge a flat fee I expect it means that much more revenue for you. And easy money at that as long as you’ve gotten your clients using software.
Fuck U6: A More Accurate Measure of the Total Amount of Duck-Fuckery in the Economy
Oh, noes! Some special snowflake haz a sad because they hafta do something. Oh, the humanity.
Christ, call me when you have a real problem, fuckin’ whiners.
arguingwithsignposts
I already get 1099s from large vendors who spend more than $500. Why are small businesses such precious snowflakes?
ETA: I see FU is already ahead of me with the snowflake issue.
debit
Jesus, seriously, how hard is it? If it’s an actual business then they either have accounting software or an accountant. For QB it’s this complicated: Select “Vendors” then “1099/1096” run the report to see who got over $600, then select them to print. 10 fucking minutes, tops.
Skepticat
This confuses me a bit,though I’m blaming that on my memory (or lack thereof). When I had a small advertising agency in Massachusetts for nearly three decades, I always had to send 1099s to any vendor/independent contractor to whom I paid more than $600 annually. How is this new regulation different?
debit
And for accountants whining about having to do it, if you don’t already have it listed as an expense, then how the fuck do you expect to use it on the corporate tax return? It’s already there, you just have to print it one extra form, two if you’re going to count the 1096.
Wilson Heath
Point of curiosity: who is lobbying for ending it?
Small businesses want a paper trail anyway if they want to expense things. True, they might not want to report income, but they would have to make at least some small effort to affirmatively hide income that would otherwise easily show on their bank records. If you have one bank account and don’t have a “parent company” in the Caymans, you basically have to resort to cash transactions.
Large businesses do a lot of business with small businesses. When you work up to the Fortune 500, small amounts are almost too small to notice. Unless there is a 1099 that doesn’t match to an item in the books.
So again, who is backing the 1099 repeal? Is this from a billionaire-funded group that is solicitous about small business?
Chyron HR
@Pococurante:
Yeah, but I want to get paid without working hard! This is AMERICA, dammit!
Seriously though, the main difficulty when issuing 1099s is in tracking mailing addresses and ID numbers, which would be made emuch worse if you had to file a 1099 for payments to every corner drugstore where you bought a ream of paper for the office, or whatever.
A secondary concern is that clients don’t keep good records AT ALL. It’s easy to say “just export from Quickbooks”, but that assumes you have everything set up right to begin with, or the report you get is junk.
Amd yes, we can hypothetically bill the client for the extra time needed to meet these reporting requirements, but at the same time the client isn’t going to be thrilled if they see their bill double without any perceived increase in the value we provide to them. “Hey, this is still just some little slips of paper, how come you charged me $200 more?”
Wayne
Another case of putting the burden not on the person cheating but on the non-cheater. It’s not the business putting out the 1099’s that are cheating but rather to force the business receiving the 1099 to fess up to receiving the income.
And yes, it will be a pain in the butt to do it, and while I understand it, I resent it because I am not the problem, those I send the 1099’s to are the problem.
@debit “10 f-ing minutes” – yeah right. And send to accountant, prob another grand to have them do it.
debit
@Chyron HR:
Me: “Hey, are you going to pay people this year?”
Client: “Yeah.”
Me: “Here’s a W-9. Make ’em fill it out before you give them a check, then send it to me.”
Client: “That’s a pain. Do I have to?”
Me: “If you want to be able to use what you pay them as an expense, yes.”
Client: “Ok.”
ETA: I honestly don’t understand the angst. I do this all the time, it’s simple, it’s not 200 or a grand or whatever outrageous number you want to pull from your butt. And if your accountant is billing you such outrageous rates, you’re an idiot for paying it.
Proudhon
The 1099 issue on its own is not without merit, but (surprise!) the repeal that passed the House has some additional provisions that could cause middle-class families to pay huge penalties if income swings cause them to lose eligibility for exchange subsidies. Essentially, the cost of the 1099 repeal (additional tax cheating) would be paid by penalties on middle-class families whose income pokes above exchange eligibility levels.
Odie Hugh Manatee
“small businesses cheat on their taxes, a lot.”
No shit, I worked for a staunch Republican who kept two sets of books for his business. He reported roughly one-half of his income and pocketed the rest for the twelve years he was in business. All told, I would estimate he shafted the government on taxes for over two million dollars. All he did was bitch about taxes and the government, right to the day he died. That and he consumed about a fifth of vodka a day. Red face, nose and cheeks but he was no damned Santa.
The best thing I ever did was tell him to fuck off and die, then walked off the job. He was nothing but pure asshole.
Lurker
@Skepticat:
I *think* the new requirement asks for 1099s for vendor purchases in addition to services. So, as a self-employed person, if I bought more than $600 worth of business-related computer equipment from Newegg, I’d have to send Newegg a 1099 for that year.
For what it’s worth, Congress tried to fix the new 1099 requirement *twice* last year. An attempt to repeal the 1099 requirement and replace it with cuts to oil and gas subsidies fell four votes short of 60 in the Senate.
Fuck U6: A More Accurate Measure of the Total Amount of Duck-Fuckery in the Economy
Chyron HR: Then maybe your clients should learn to be better business managers. R they can go back to working for someone else. Either way, life is filled with challan ges for the terminally pathetic.
stuckinred
I paid a guy $3000 to do some extensive soffit work on my rental. He gave me a receipt, I claimed it. that was a stone bitch
cleek
@Skepticat:
new rules require 1099 for every person/company which you spend $600 or more on, per year (cumulative over the year). buy a new PC? 1099. buy some software, supplies, etc? 1099. buy $700 worth of soap from a supply company, over the course of the year? 1099. it’s not just services, it now includes goods.
in CNN’s words:
arguingwithsignposts
@cleek: Ah, so it’s a jobs program for accountants. :)
jwb
@Guster: My wife has a small business and I do her taxes (Schedule C). It’s not sending out the 1099 to subcontractors and other small businesses that would be the biggest pain. In fact, she already routinely does this. Rather, it’s tracking down addresses, EINs, etc. for supply and retail companies where she spends $20 here, $30 there but total expenditures add up to $600 over the course of the year that would be a pain. I mean, really, what’s the point of sending out a 1099 to Office Depot?
Lori
Thanks for pointing it out! What you say is true. And a business should be keeping track of expenses, if they are doing their business honestly. There are all kinds of low cost software solutions to handle this(everything from free OpenOffice spreadsheets, free Mint.com money management tools, to pay-for tools like Quicken). Tracking all their payments ‘on the books’ not only makes for honest tax-paying, it makes for good business. A business should track where its money goes, in order to be able to evaluate their expenses and improve upon them in the future.
cleek
@jwb:
and now imagine you’re Office Depot. how many 1099s are you going to have to manage per year ?
arguingwithsignposts
@jwb:
One wonders if there could be a pretty easy software fix to this.
gypsy howell
Only big corporations should be allowed to cheat on their taxes.
Kristine
@Guster: Did you incorporate, or are you a Schedule C person?
Just Some Fuckhead
Everyone cheats on their taxes.
Svensker
If you have to get address and SSN/FIN from every supplier, including Office Depot, that you might do $600 worth of business over the year, that is incredibly onerous. You guys are thinking small business that saved $2,000,000 in taxes over 12 years. I’m thinking about the women I know who run an ebay business to support themselves and their families and are very happy if they gross $50,000 a year — and there are a lot of them, believe me. For those people, that reporting would be a huge difficulty, in lives already crammed full just trying to get by. Of course, if they can’t figure out how to do it, they should just get buried in crap, right? After all, they’re not very successful so who the hell cares about them?
MNObserver
As a small business owner myself since 95, I want to chime on this one… generally just lurk.
The resistance comes mainly from a sense of ODTAA… One D*** Thing After Another. Generating 1099s does not generate income, it generates paper and postage expenses. While I’m running, and stamping, and enveloping, and double-checking, and mailing the 97 1099s I would have had to run this year (yes, I counted), I’m not finishing the software I’ve been contracted to get written.
Understand, I am in favor of the rule. Far too many businesses get a pass by “forgetting” revenue, often in substantial amounts. I’m constantly fighting that battle with my partners (no, you can’t just “trade” that router for your car repair bill).
The “easy software fix” for many small businesses would be simply someone to do the grunt work… print, double-check ID numbers, mail. CPAs, natch, but I can’t imagine there weren’t people looking at setting up something web-based or the like, upload your Quickbooks/Money/etc export file and for 50 cents per form (includes postage!), we’ll take care of your 1099s. Opportunity lost… (for now…)
Having the feds approve a 1099 form that could be mailed under postcard rates would be nice, too.
My two cents.
Morbo
@Svensker: Yup, and GE deserves to pay no taxes because they can pay for the accountants and lawyers.
debit
@Svensker: I’m sorry, but that’s silly. If that person hired someone and issued them a payroll check should they not have to file withholding returns or W2s because it was too complicated and they were too busy?
50 grand a year? They can afford to spend a few hundred bucks and get Quickbooks or a reasonable facsimile thereof.
Fuck U6: A More Accurate Measure of the Total Amount of Duck-Fuckery in the Economy
Svensker: I sure it can be blamed on the greedy union members, somehow. Give it a shot.
Lori
Svensker,
I disagree with you. If those women aren’t currently managing their business finances using spreadsheets and tracking all payouts, they are managing their finances badly. What makes you think getting an EIN or address from suppliers should be hard, given the internet and phones? Starting to track their business finances in a modern way will help their business(even using a low-tech free option like OpenOffice calc spreadsheets). Don’t underestimate their ability to do simple computer tasks with numbers just because they are women. If they are business owners, they should be together enough to either do it themselves or to assign it to an appropriate employee.
Omnes Omnibus
@Svensker: They got a receipt from the vendor, right? That receipt probably has the address. Bang, that part solved. Taxpayer ID # is a slightly different matter but not insoluble.
Seitz
Not to mention most small businesses don’t have a fucking clue when it comes to sales and use taxes. It’s not directly related to the ACA, but as long as we’re talking about small businesses getting away with paying taxes…
debit
Okay, I’m going to make a new comment for this instead of editing. I think what’s pissing me off is the insistence that filing an additional form is too complicated or a burden. When I did payroll and some light bookkeeping for a security company, I got a letter CBS broadcasting; they wouldn’t pay for our security detail at a sporting event unless we sent them a W-9. I filled it out, faxed it over, we got our check.
Part of doing business is having to keep track of shit. It doesn’t have to be a huge drama or ordeal.
Fucen Pneumatic Fuck Wrench Tarmal
@Svensker:
i have a small business. more like a thing i started to do, as a hobby, and because doing it kept me out of bars. accidentally people started wanting to pay me for the skill i learned. not enough to live on, or replace actual work mind you, but just a thing, i do.
at some point, i had to make the unamerican decision of not doing this thing, as often as people were willing to pay me to do it, because then i would have to actually start accounting for things, and acting like it was my real work.
i have a job, i don’t need another, this is/was just a thing i do. what people don’t realize is that they are cutting out
cottage industry and hobbyists, when they raise the barriers of entry, to any level beyond what hobbyists thought they were getting into.
if i were lazy, i would still be drinking every night.
mds
Uh, guys, while dueling accountancy is very exciting, forest for the trees.
@Proudhon:
and
@Lurker:
This is the real gist. This particular fix to a no-doubt legitimate problem plants a poison pill in ACA implementation for a large swathe of middle class voters. Because the alternative was for fewer tax dollars to go to subsidizing oil companies. Hey, how about a fix to the $600 bit that doesn’t guarantee even more widespread voter hatred for health care reform?
Omnes Omnibus
@Fucen Pneumatic Fuck Wrench Tarmal: That logic could also suggest that small business should be excepted from any regulatory control because all regulation raises barriers to entry. Obviously there must be a balance; it just does not seem that this requirement is overly onerous. A well run business will have most of the information needed for the 1099 as a matter of course and acquiring tax ID #s could become SOP. I seriously doubt that this is the kind of regulatory burden that would cause someone to get out of business. Further, the goal of ensure that business pay their share of taxes is a worthy goal.
Bill H.
Point 1: $600 generates about $300 in tax. Is it really worth the government’s time doing the match between the pater’s copy and the payee’s copy to assure the collection on that $300 in tax, considering that a considerable portion of it in many cases will be offset by expense?
Point 2: The cost of filing taxes is already excessive. The more documentation that needs to be collected and submitted, the more expensive that filing process becomes. If a businessman has several hundred clients averaging $400 each, he now can simply list them. Under the new rule he would have to be sure he collected 1099 forms from each and assure that his numbers agreed with theirs to the penny.
Point 3. The cost to purchasers is considerable. They will have to keep on file not only the name and address, but also the tax numbers of vendors, and will have to audit those tax numbers for accuracy. When a 1099 is returned as undeliverable, they will have a significant workload to see why and will have to file reports as to why.
Point 4. I submit a $350 proposal to someone I have never sold to before and the client says, “Well, it looks good, but if I buy from you I’ll have to fill out an additional 1099 for you. I’m already buying from another guy, so if I get it from him that’s one less form to fill out.”
Lori
@mds:
No reason small business owners should get to have larger incomes and still get highly subsidized health insurance, when workers for big companies don’t. If you want to argue for higher subsidies for everyone making a certain income level, then fine. But the hell with small business owners getting a free pass to cheat on taxes and cheat on health care subsidies.
Bill H.
Point 1 above should be “less than $200 in tax”
Bill H.
I can assure you it is the “kind of regulatory burden” that will reduce the number of vendors that a businessman will consider doing business with. When adding a new vendor means keeping a new record than interfaces with the government, that is vastly different than one which merely might result in a wrong mailing address.
Lori
@Bill H.:
Why? Because taking 2 minutes to enter a new row in a spreadsheet and look up an address/EID using the Google is super-hard? Or do you think that business owners (not all men, by the way, Bill) are too scared of the US government knowing about who they buy their computers or drywall from? Is the latter scary, to any business owner who isn’t unreasonably paranoid about the federal government?
Pococurante
@Bill H.: Most small businesses purchase from a limited range of suppliers anyway.
wenchacha
Having sold stuff on ebay in the past, I can think of some problems. I buy little stuff at garage sales, church sales, and thrift shops. It’s surprising when you find a kid’s book at a garage sale for $.50 and somebody in Australia will pay you $200 for it.
This doesn’t happen every day, but if you make enough smart acquisitions, you don’t need extra help for an ebay shop. You don’t deal in volume, just with proven high-profit items. Do you 1099 church rummage sales? That garage sale you went to last summer?
Church Lady
It’s not just small businesses, but every business that would have had to comply with this rule. Even though we are a small business, this would have been an accounting nightmare. We have salesmen that travel extensively, all over the country. Imagine having to track each individual gas purchase, meal and hotel bill over the course of a year. Oh, gosh, so and so only spent X dollars at this particular gas station, so I don’t have to issue a 1099, but he spent X dollars at that one, so I have to send them one. They were all Exxon stations, but while some of them were corporate owned, others were owned by independent owners. Was $600 spent at any one particular station? Same with hotel/motels, restaurants, etc. There is no accounting software to handle that and would take an army of clerks to figure out, or a huge CPA bill in the making. Yes, it would have been an incredible pain in the ass for our company to deal with this.
NonyNony
@Just Some Fuckhead:
Since the day I became a taxpayer I have been scrupulous about NOT cheating on my taxes. Ever. I even pay the goddamn State of Ohio “use tax” on Internet purchases.
I hate taxes as much as most other people do but damn it, I get huge benefits from my tax dollars that I’d never get if I had to pay for things myself. Taxes built this country into the powerhouse it is today – Interstate highway systems, electric power grid, public education for everyone, strongest fucking military on the planet – we only started going downhill as a country when we decided that people could live in an awesome country without having to pay anything for it (see also California, State of).
In my mind one of the most fucking unpatriotic things a citizen can do is cheat on their taxes. I don’t generally like the idea of rescinding voting rights for anyone, but there are days when I think anyone caught cheating on their taxes should have their voting rights taken away from them. Unpatriotic bastards.
gene108
@Guster:
You’d need the Tax ID and address of everyone you pay more than $600 dollars to. Getting W-9’s from everyone and having that information on hand can be tedious. Small businesses usually have one person doing a lot of different jobs. Getting this info for everyone you do business with would just be one more pain in the ass thing to do.
I don’t see how issuing 1099’s would eliminate some of the fraud at the top of the thread. Business owners claiming a vehicle for as a company car wouldn’t be effected by this.
As it is, you need to issue 1099’s to anyone who provides services for you in excess of $600. Paying for home renovations with company funds wouldn’t be effected by this. You still should give those guys 1099’s. The law wants to expand this to people you buy goods from, as well.
What I don’t get is how you’d handle something like going to Staples to buy office supplies. Staples would be a vendor. You’re annual payments would exceed $600. Do you need to issue them a 1099? The law isn’t clear on that sort of thing, from what I’ve read.
PPACA has some very good points, but it has some unwieldy bits, which will get modified. I think this 1099 provision is one of them.
Sinister Eyebrow
I have a solo law practice (small business!) and do family law. So I can point out 2 things:
1. The 1099 requirement doesn’t amount to much, but anything that makes for less paperwork is fine with me.
2. Small businesses are a divorce attorney’s nightmare. Almost everyone who has a small business tries to minimize his or her income for tax purposes and determining the real value of the business or the actual income of the person is difficult at best. This is not to say they all cheat on their taxes–there is an incentive to take as many deductions as possible–but many certainly do.
gene108
@Sinister Eyebrow:
For your business maybe, but for other businesses, who purchase more goods it would be more onerous.
There are many good parts to the PPACA. This isn’t one of them.
kc
@gene108:
Bingo. It wouldn’t.
bad dad
@debit: As a CPA, I call bullshit. It’s not just “printing forms, ten minutes tops”. It’s the process of gathering, storing and sorting not only names, but addresses and Social Security / Taxpayer ID numbers for EVERY FARKING TRANSACTION YOU DO because you never know who is going to total over $600 for the year when the year is done.
I know tax cheating goes on in small business. However, these proposed rules are onerous and unworkable.
SB Jules
@Chyron HR:
It would have been a HUGE pain. I am not crazy about doing 1099s for my small business clients already, but this would have been crazy. Currently, 1099-misc are prepared for non-employee compensation over $600, but what bugs me the most is that the copy for the IRS has to be on a red form. Very irritating.
Ivan
Here’s a twist: VAT.
Every few months someone floats a trial balloon on whether to reform the tax system and add a VAT, and it’s treated seriously by the Very Serious People.
But given the shit storm over the 1099 requirement, a VAT is never happening. The bookkeeping requirements for a VAT make this 1099 mess look like child’s play. You have to keep track of every bit of money you spent (not just over $600) and get your outgoing and incoming VAT totalled up since you only pay VAT to the govt on the net (your “value added”) and reported, and anyone you purchase from or sell to has to do the same thing, and the way VAT fraud is controlled is by comparing these records so you need *all* of them.
So another thing this 1099 mess proves is that any attempts to introduce a VAT in America are just pure fantasy.
debit
@bad dad: Baloney. How many one time vendors does a small business really have? Companies, large and small, usually buy where they have an established relationship, and when they do go to someplace new they generally know if they are going to need/want to go back after the first or second transaction. And at the end of the year, if they find they bought more than $600 and need that tax ID, it’s nothing that a fax machine and a blank W9 can’t fix.
Skepticat
Thanks, Lurker and Cleek, for the clarification. Now that I’m retired (and old), I wasn’t paying enough attention to this. Trust me to shoot off my mouth anyway.
Fucen Pneumatic Fuck Wrench Tarmal
@Omnes Omnibus:
sure, but are you going to give your tax id number to a stripper? not my business,just an example.
bad dad
@debit: Okay. Are we supposed to track every single gas station we visit while fueling our business automobiles? Car washes? What if three of the ten stations we visit have the same owner and suddenly I’m over $600? Do I have to total that all up? The intent of these rules is to turn each and every one of us into mini IRS auditors.
In addition, we’re all supposed to be willing to give our social security or tax ID numbers to each other in this era of identity fraud? Really? And we have to rely on the computer security of every single vendor we do business with to make sure that that information isn’t compromised? F%$k that.
Mnemosyne
@Svensker:
I’m thinking I should quit my job and do eBay full time. I’m 42 years old and have never grossed $50,000 in one year in my entire working career.
You do realize that complaining how evil it is to make people making a mere $50,000 a year pay taxes doesn’t look that great to the rest of us who make less than that and do pay our taxes,right?
Mnemosyne
@Church Lady:
You mean you don’t make your salesmen file expense reports so you can make sure they’re actually doing the things they say they are? You’re probably losing thousands of dollars every year just due to them “accidentally” putting personal expenses in with business ones and having you pay them.
bad dad
@Fucen Pneumatic Fuck Wrench Tarmal: Actually you will need the stripper to give you her tax ID. Good luck with that.
Church Lady
@Mnemosyne: You have obviously never filed an expense report,nor processed one. Each type of expense has a ledger number attached to it. The expenses are not accounted for by vendor, just the type of expense it is. We don’t have a separate line item for each Hampton Inn in the country for example. And Hamptons, as is the situation for most hotels (and gas stations, other hotel chains and restaurants for example) are owned by individual franchisees. Under the law, we would have had to issue 1099’s to each individual franchisee whose establishment sold us more than $600 in goods. Three to four nights in any individual hotel or seven or eight tank fulls of gas would easily tip it over the limit.
Not every small business is a Mom & Pop entity with only a few suppliers. Many have money paid to thousands of vendors every year.
Phoenician in a time of Romans
@Wilson Heath:
The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.
Seems to me that any sane employee in today’s environment would stash away evidence of employer tax-evasion as a means of avoiding redundancy…
Svensker
@Mnemosyne:
Many of them would be VERY happy to be grossing $50K a year. And grossing that much means that your net is probably going to be about half that, given the costs involved. So, you’re talking a business who’s net is about $25,000-$30,000 a year. Positively rolling in dough.
Most of the folks I know who do ebay don’t even come close to the $50K a year gross.
I’m just trying to imagine getting tax info from garage and estate sales, and being willing to give your SSN to anyone who buys something at your garage sale. Um, no.
And for all those folks who say, “how many vendors could you buy from a year anyway, big deal!” — in our small business, we buy from 100s of different suppliers a year, some regularly, some only once. I really look forward to keeping track of all the tax info on each and every one of those folks as well as keeping track of how much I spend at each place. Sounds fabulous!
Mnemosyne
@Church Lady:
I file at least two every month for each of my two bosses, plus a report for my own expenses if I have any. I’ve been doing expense reports for people at various jobs for about 10 years now. I am very familiar with the procedure — in fact, it sounds like I’m more familiar with it than you are.
That is seriously sloppy accounting. You really don’t keep track of where your employees are spending your money, just what it was spent on? I have to itemize every hotel bill my boss has to separate out lodging, food, and other expense so the company can report it properly to the IRS.
I would be curious to find that out, actually. I doubt that Hampton’s or any other franchised business is set up so that each hotel goes out and makes its own purchases of stationery, business cards, linens, etc. from their local vendors. Otherwise, you would have absolutely no consistency in your franchisees and have no idea how they’re making your brand look.
I also doubt that they leave all of the tax decisions up to each franchisee — again, that’s begging for your company to be sued by the IRS when your franchisee underreports his income to you and now you have to pay up because you did your taxes wrong. So, no, I doubt that you would have had to get a 1099 from each individual hotel in the chain.
Mnemosyne
@Svensker:
So, again, more money than I was grossing before taxes 6 years ago is a horribly tiny amount of money that they shouldn’t have to pay taxes on? But I should have to pay taxes because I’m overpaid if I’m making $25,000 a year at my job?
You really don’t have much knowledge of what ordinary people actually make in salary these days, do you?
Svensker
@Mnemosyne:
What are you talking about?
I didn’t say people shouldn’t have to pay taxes. I’m saying that I don’t think $25K is a whole lot of money to be supporting a family on. I know lots of people do it for less. (This is also why I have a problem with cops making $110K a year, and the $25K folks having to pay taxes to fund those cops plus the cops’ retirement and health care, while they’ve got nothing for themselves.)
You seem intent on picking a fight with me because I think that for a lot of small businesses — and I mean small — these reporting requirements would be onerous. If you disagree, that’s fine, but attacking my knowledge of the “common man” doesn’t seem particularly enlightening or necessary.
Fucen Pneumatic Fuck Wrench Tarmal
@bad dad: it goes both ways. i have actually witnessed a guy who was entertaining a client ask a stripper for a receipt. a friend of mine in the biz says it is more common than you would think it would be.
not to mention all the house fees,tip outs, gypsy cabs and what not, all of those folks will be exchanging forms, theoretically.
Mnemosyne
@Svensker:
Because every single time anything about labor or employment comes up in any thread, you insist on complaining about an extremely small group of people that are specific to your town that may be overpaid. In fact, you managed to do it again in that comment.
Now you’re telling me that the same things I get paid a salary to do every day are so horrible and onerous that small businesses just shouldn’t be subjected to such things even when they gross more money than I do because somehow the family expenses that they use their income to pay for are much more important than the family expenses that I use my income to pay for.
Holden Pattern
@Mnemosyne:
No, I think Church Lady is right here. Each franchisee is a separate taxable entity — probably mostly special purpose in-state LLCs or corporations. And that’s what the IRS cares about. They don’t care about uniformity of presentation or franchise fees or anything else.
Does this particular entity have a separate tax ID number? If yes, then they get a separate 1099. If no, then they don’t. That’s it.
Svensker
@Mnemosyne:
Er, you’re reading a lot into what I said. I said I think they’re onerous for small business. You don’t think so? Why, other than the fact that you don’t like me?
SB Jules
@Holden Pattern:
Haven’t you seen the Best Western ads–each franchise is separately owned. I think Motel 6 & Hamptons are too.
300baud
@Just Some Fuckhead:
I don’t.
I don’t want to make out like I’m some sort of saint. If I had the opportunity to steal a lot of money, I’d at least think about it pretty hard. But trading my integrity plus the risk of an audit for a few hundred bucks? Seems like a stupid trade to me.
Plus, I generally like our government. It’s mildly dysfunctional, but having lived in countries where the government is really screwed up, I appreciate how much it gets done that i would never get around to.
Holden Pattern
@SB Jules:
We are in violent agreement. What I am saying is that the particular form of ownership is likely to be a corporate entity formed just for the purpose of running the franchise, regardless of who the underlying beneficial owners are (usually someone or some business that’s local to the area.) And more to the point, each franchise is VERY likely to be a separate taxable entity.
Ruckus
I have a small biz and I have to fill out one 1099 per year. One. And that’s when my ex landlord had fired the management company and I had to send them a check directly.
It’s not a big deal. It never has been a big deal. It’s much easier than filling out other income tax forms. My accountant had me doing my books on computer about 20 yrs ago. It took me about 4 hours to write a program to do that and it was much simpler than the then currently available software. Today? For what that 4 hours of time cost me I can purchase any number of good programs that work, that take less time to do than double entry manual bookkeeping.
Ending the 1099 program is bullshit and everyone know it. It’s a way for more to avoid taxes.
Wallace
Man, 1099’s are a pain. I kind of think anyone talking about this based on their experience of having to issue 1 or 2 a year doesn’t really know what they’re talking about for a little bit larger business that has petty cash and credit cards, and the burden of having to get taxpayer ID numbers from 200 vendors, the pain of getting the guys in the field to understand they have to collect taxpayer ID numbers before they pay for anything directly, and the worry over penalties that come from not complying properly with the requirements.
Caz
So you’re against repealing this portion because small businesses cheat on their taxes? Do you have no shame at all?? This site gets patheticer and patheticer every day.
bad dad
@Caz: No. We are saying that we understand that small business people cheat on their taxes. It’s just that the amount of effort needed to comply with the proposed rules is just too burdensome, not only to the individual businesses, but to the economy as a whole.
You want some revenue? Bring 1,000 IRS agents up to speed on transfer pricing and let them loose on the multinationals. That will do more to bring in revenue than having to sort a billion 1099-MISCs.
debit
@Caz: I think the phrase you’re looking for is “more pathetic”. Patheticer is not a word, now matter how right your experience with Hooked on Phonics makes it sound.
michael
LOLOL. Yeah, the IRS could toooootally process an extra 20 billion 1099 forms. And this wave of paper would decrease the opportunities for tax fraud!
You heard it first at Balloon Juice, kids.