Re: OT(kinda): Texas Plane Crash - The Note

You can't treat Joe Blow Consulting as a business unless he so denotes
that type of business and provides an appropriate TID.

Check appropriate box:
•••
Individual/Sole proprietor
Corporation
Partnership
Other (see instructions) ©
Note. If a requester gives you a form other than Form W-9 to
request your TIN, you must use the requester's form if it is
substantially similar to this Form W-9.
•••

Oooopsy!  Doopsy!  You just showed your inexperience.  You DO have to
provide your SSN or TID, EVEN IF YOU ARE PAYING CASH!

BTDT :-)  First time it happened, really pissed me off.  WHY do I have
to provide my TID (business purchase of truck in this case) for buying
in cash?  Because: Big Brother requires it :-(
       
                                       ...Jim Thompson

           
I love to cook with wine.     Sometimes I even put it in the food.

You hand "Joe Blow Consulting" a blank W-9 that Joe must fill out and
return to you. You do this based upon whether you will subsequently be
submitting a 1099 or W-2 to report income paid to an individual.

I treat Joe Blow Consulting as if he were a business.

Do you hand your local Lexus dealer a W-9 when you write them a check
for your new car?

I remembered wrong, it's a W-9...

www.irs.gov/pub/irs-pdf/fw9.pdf

If you are paying "Joe Blow Consulting" more than menial sums, and NOT
getting a W-9, you're a bit of a fool; but then you know everything...
enjoy the sting ;-)
       
                                       ...Jim Thompson

           
I love to cook with wine.     Sometimes I even put it in the food.

A W-4 is for setting tax withholding for employees. I do business with
companies and I behave as though I were a company. My clients don't know
whether I'm just one person or the representative of a large
corporation. Likewise, I don't ask my vendors what their status is. I
don't even know whether they are based in the US or not. If the contract
tells me to sent payments to an address in the Caymen Islands, that's
what I do.

The biggest trap you can fall into with the IRS is to start filing out
paperwork that says "employee". Think like you are doing business with
Boeing or Square D and expect the other parties to your contract to
treat you likewise.

You're looking to be stung.  Everyone I do business with (in the US),
first thing out of the box after the NDA is the W-4, requiring the
vendor to give TID and declare individual, LLC, etc...
       
                                       ...Jim Thompson

           
I love to cook with wine.     Sometimes I even put it in the food.

I don't know who I'm hiring. ACME Engineering Services might be a
corporation or just one guy. Its none of my business. I receive the
deliverables and I pay the invoice.

AIUI payments to sole proprietors or individuals require a 1099
report.

Payments to a corporation do not.
       
                                       ...Jim Thompson

           
I love to cook with wine.     Sometimes I even put it in the food.

If I hire a firm to provide gods or services to my company, I generally
don't submit a 1099 form. There are a few exceptions (attorneys fees,
for example). But in general, I contract with vendors, not people. If
those vendors hapen to be sole proprietors, that's their business, not
mine. 1099 forms are for reporting payments made _to_people_, not
corporations or other entities (there are a few strange exceptions).

On the other side of the transaction, when I negotiate a contract with a
customer, I do so as an agent of my company, not an individual. The
contract states that my company will be providing goods and/or services,
not myself.

At the time 1706 came into effect in the late 80's, I worked for a
company that hired contract engineers on 1099 basis if they could show
some sort of existing business.

One older engineer owned a company that provided dump trucks on daily
call to construction sites in San Diego area.  The only employees were
himself, his son, his wife and temporary truck drivers.  He gave in
and became a full-up company employee.

Another owned a small business in Phoenix that designed and built
small electronic assemblies.  Becuase he was a friend of one of our
managers, he was contracted to participate in a major military
proposal effort to design a couple of assemblies (a power supply and a
control panel) that his company would then manufacture.  He worked on
our site on our hours with our equipment for several months.  He kept
his independent status, delivered as planned for several years, and,
to the best of my knowledge, is still in business.

Sounds like this guy didn't have the brightest accountants/lawyers when
he set up his companies.

The guy who reportedly just flew a plane into the Texas IRS building was an
enginner.
His apparent "suicide note" outlines some issues with being a contract
engineer in the US:

http://www.cnn.com/2010/US/02/18/texas.plane.crash.profile/?hpt=T1

The note:
http://i2.cdn.turner.com/cnn/2010/images/02/18/stack.letter.pdf

Dave.