Posted on 03/21/2013 12:22:52 PM PDT by George from New England
I am finding businesses demanding I fill out the i.r.s. w-9 form for small jobs where the total payment is under $600. This is subcontractor type work reportable with 1099-misc form at year's end, only if the amount exceeds $600. I am being told that failure to comply could result in an i.r.s. fine of $50. Web research suggests that business have the option to require w-9 compliance
http://smallbusiness.chron.com/am-required-law-obtain-form-w9-vendors-32756.html
From that site:
"The IRS requires that you obtain a W-9 from every vendor from whom you purchase $600 in labor and services or $5,000 in direct sales, but you can request W-9s from vendors for smaller purchases."
and
"The vendor must send you a copy of his W-9 upon request, or he will pay a $50 fine to the IRS."
Identity theft is abundant so I don't want my SSN in any database, not required by law. But where do I turn?
Tax his land, tax his wage,
Tax his bed in which he lays.
Tax his tractor, tax his mule,
Teach him taxes is the rule.
Tax his cow, tax his goat,
Tax his pants, tax his coat.
Tax his ties, tax his shirts,
Tax his work, tax his dirt.
Tax his chew, tax his smoke,
Teach him taxes are no joke.
Tax his car, tax his grass,
Tax the roads he must pass.
Tax his food, tax his drink,
Tax him if he tries to think.
Tax his sodas, tax his beers,
If he cries, tax his tears.
Tax his bills, tax his gas,
Tax his notes, tax his cash.
Tax him good and let him know
That after taxes, he has no dough.
If he hollers, tax him more,
Tax him until he’s good and sore.
Tax his coffin, tax his grave,
Tax the sod in which he lays.
Put these words upon his tomb,
“Taxes drove me to my doom!”
And when he’s gone, we won’t relax,
We’ll still be after the inheritance tax.
“””I’ve been doing business for 20 years without one.””
So you have never had employees then.
If John Doe accepts your credit card as payment for a bill for $432, his credit card processor will send him a 1099 at the end of the year which includes this $432 as part of the total of all charges processed. The 1099 will be issued under whatever tax id or ss# the business used at the time they signed up for the processing service.
Everybody wants to get their fingers in this pie. Texas has a big issue with determining whether someone is paid as an employee or independent contractor and a pretty lengthy list of rules to define the difference. If they can establish that you don’t meet the criteria as an independent contractor, the person paying you has to pay Texas Workforce fees which go into the unemployment tax fund.
Some cities require you to get a dba and pay a license fee and business taxes, Houston loves their money from this source. Banks require dba documentation as well as a tax id# for a business account. My bank treats business accounts for a sole proprietor as both a business and personal account so I can deposit checks to and from both the business and my name in the same account but I don’t pay any fees because I qualify for no fee banking as a business account.
It does get a little crazy trying to sort through all the city, county and federal regs and the Franks-Dobbs fiasco didn’t make it any easier.
I had employees 3 times and all 3 times it reminded me why I didn’t want employees
It’s getting so complicated to operate a business..it’s ridiculous.
Thanks for addressing the contractor vs employee issue.
We have required our contractors to fill out a W-9 for years or we simply won’t use them. If we don’t have one on file we are required to withold tax and remit to the government “on their behalf”. What company in their right mind wants to be in that position? Companies have probably increased the requirement due to OCare regs (temporarily put on hold) that ANY vendor used will be required to have a 1099 issued to them. Individuals, corps or vendors that sell supplies. Don’t ask me what that has to do with OCare.
Then...our workers comp carrier is requiring that contractors we use carry their own w/c policy or we are penalized.
Geez..I feel sorry for small contractors. I also feel the pain of companies that are trying to exist within the confines of the “rules” of state, federal and companies that they have to answer to.
They are allowed, by law, to ask for the number. That’s the opppsite of “unlawful.” Words means things.
“”Geez..I feel sorry for small contractors. I also feel the pain of companies that are trying to exist within the confines of the “rules” of state, federal and companies that they have to answer to””
I am one of those, have been for 35 years. I have to follow the rules very closely because I only do work for contractors on government projects. It is at the point now that I feel the only reason I am in business is to be a revenue collector for the government. The government has made it nearly impossible to be a legitimate contractor that follows all the rules. They do some pretty serious stuff to you if you get caught cheating their system.
If you have so many clients, don’t you have a federal taxpayer ID rather than SS# that you could give them?
Why do it now? Please see the question with which you launched this thread.
20 CFR 3 A7 404.1905
31 CFR 103.34(a)(1)
26 CFR 301.6109-1(c)
Don’t ask me what that has to do with OCare.”
Nothing the government does has anything to do with anything except redundancy and stupidness. At least it dawned on someone that if they didn’t stop the 1099 nonsense IRS was going to be bombarded with a gazillion pieces of paper.
Again, the unfortunate thing is different government entities including the House and Senate keep passing bills and mandate regulations that duplicate or even conflict with information required from another agency. The underground cash economy is growing by leaps and bounds and more and more people are just moving the cash from one pocket/person to another.
I moved out of the city into a small county that hates paperwork so only deal with the IRS and then only once a year. I consider myself fortunate to have the kind of business that could do this. Otherwise I’d shut the doors.
At least it dawned on someone that if they didn’t stop the 1099 nonsense IRS was going to be bombarded with a gazillion pieces of paper.
Does your response mean they are not allowed, by law, to ask?
“The IRS was going to be bomarded with a gazillion pieces of paper.”
That’s the truth. How would they match up a calendar year 1099 with a company’s fiscal year?
It’s coo-coo.
Cash economy seems to be coming into it’s own. I have had people work for me, personally, that offer a discount for cash. Of course that won’t work for a company of any size.
I have a couple of rental properties. Since I am an individual, I have never been required to issue 1099’s to people that worked on these properties. Last year, my accountant tells me I am required to.
Guess I’ll just have to do repairs myself. ;)
Don’t believe for a minute that has gone away.”
You are right. Requiring the information by that particular method has gone away. The requirement will resurface again but in a different format and from a different direction. And it will be far worse and greater in scope than just having to send 1099’s in for everyone you do business with.
I remember when Hillary tried to institute her healthcare plan. People celebrated thinking it had been done away with forever. But then we had HIPAA which people thought was wonderful because of the way it was packaged and misrepresented and then Romneycare, both just a prelude for Obamacare.
Frog meet pot and here comes amnesty for all.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.