Further Light and Knowledge

First, words cannot express my gratitude for jb and the others who are involved in getting our little corner of the cyberworld running again. Thanks to everyone who helps and to everyone who has patience.

As many of you know, my job involves keeping track of what the IRS is up to. Every couple of years they have a "compliance initiative". This is usually divided into two parts; first there is a "voluntary compliance" (often informally called an amnesty program) followed by an aggressive targeted examination and collections effort which is intentionally abrasive. The idea is to get the message out. A few buiness bankruptcies and failures usually result when the object involves business taxes. Commonly larger businesses take advantage of the "voluntary compliance" offer and the little guys who either never hear of the program or who "heard" from someone that it didn't really apply to them are the ones put out of business. Well, we have another one.

The issue is a golden oldie, the misclassification of common law workers as independent contractors rather than employees thus relieving the employer from the expense and responsibility of withholding Social Security and income taxes and allowing them to issue Form 1099 rather than Form W-2. This was last addressed in the Revenue Act of 1976 and yes, I was around then and I know all about Section 530 relief. Trust me, it won't apply to you. Certain industries such as construction are notorious for abusing the classification problem, so we are talking about maybe 20 million or so misclassified workers and tens of billions of dollars a year of lost revenue (most of it to the Social Security trust funds).

So here's the deal. Eligible employers who come forward and sign Voluntary Classification Settlement Program (VCSP) agreements with the IRS will pick a prospective date (most will choose January 1, 2012) after which they will consistently treat all workers in the class designated as employees. They will make a payment of $1,028 for every $100,000 of 2010 payroll (the Section 3509 computation). In return they will be charged no penalty or interest and will be immune from employment tax audits on the identified classes retroactively and in the future. The statute of limitations on this issue will be extended such that you can mark your calender for the employment tax audits to start in 2013.

Now all this will mean absolutely nothing to the vast majority of you who get W-2's. For a few who get Form 1099 from a larger employer, this is why you might be switching over to employee status and will see withholding on your paycheck. If anyone is a contractor who has been paying folks on Form 1099, this is the time you need to decide if you would rather get on the train or be run over by it. It's OK to PM me if you have questions.

Jamie

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"Now I troll back to my little cave where we no talk about things we no understand..." Malfalda

"Ummmm. Roadkill."

Awesome, Jamie -- thanks! I have been the 1099-er in the past and always found it a bit challenging. Well, the whole US tax code is challenging.

Okay, I'm sending you a PM anyhow because of something called "Making Work Pay"...??

Cheers,
wry

The U.S. tax code needs to be changed. They don't need to decimate the middle class by taking away much needed entitlement programs. They just need to tax General Electric, Exon Mobile, Wells fargo, Citicorp, and many more billion dollar enterprises that paid zero, yes that's right, zero, in taxes last year, and every year prior to that. The conservative bastards in Congress want to protect the blue bloods with money, so they sign legislation to protect the very wealthy, and that includes all these businesses. I was disappointed when Obama went along with this this year. It won't ever make me jump ship, because that would be far too calculating against the have nots, but it was disappointing.

yup

i can't help but wonder if hillary wouldn't have been a better president.

but you know, she might have failed for some of the same reasons obama is failing. the people that think their vote is the only relevant vote, the same people that reject compromise with other voters, these people are fucking the country up the ass. these voters are not ready to share the country with the rest, they are not ready to concede that americans come in different shapes and colors. they talk about taking back america - go fuck yourself teabaggers, the country doesn't just belong to you. god, what a bunch of supreme assholes.

having said that, obama has made some pretty goddamn disappointing choices. i would have loved him forever, if say for example, he didn't give a fuck about re-election and made choices based on what was right and not politically expedient. wouldn't it have been great if he prosecuted the wall street criminals. can anybody think of a downside to that prosecution?