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Thread: IRS inquiry: Do incorrect 1099s need rebuttal?

  1. #31

    ind. contractor and 1099s

    My status is this: I've been redeeming lawful money since 2010 (thank you David!!) and have been fortunate not to work since then -no bank acct, no employee status, no 1099 contractor, no filing requirements. I am a clean slate, especially for 2013 and beyond. I need to work again, and am able to work in a place of fine dining. My only intent is to do things lawfully.

    I have heard that "under the table" work is not legal, but what defines that? Is it a company (entagled in state laws, taxes, etc) that pays the worker, therfore creating undocumented income? What if working for cash tips alone? The company pays you nothing, you are basically getting paid by the public... no different than a beggar or street busker on a subway, no? Can you AND/OR the company get in trouble if you and they agree on "free" work, ie. a volunteer? Must it be via private contract (and via verbage of lawful money for good measure?)

    Now, what if that is not agreeable (or legal), and one still wants to work for JUST cash tips, but to keep the fine dining's accountant and owner stress free, you agree to provide a SSN, verbiage of lawful money, and expect the company to issue a 1099 (this has been offered)... How can a company claim on a 1099 they are paying you? Aren't they saying you were paid money by yet several other 3rd parties?

    I am trying to place the best course of action over a time sensitive matter. I thank you all!

  2. #32
    Anyone? I am really hoping someone might be experienced in this area.

  3. #33
    Yours is an interesting situation, Topgun. The employer has some liability issues such that he is unlikely to want you 'working' in his place of business without some sort of contractual relationship, for insurance liabilities purposes at least, but he does not want to pay you minimum wage. If you are not an employee, paid by the employer, there is no way the 'employer' can then issue a 1099 to you for monies paid to you by others. You can probably get an insurance company to sell you a fairly cheap ($100) policy which constitutes a sort of bond, promising to indemnify the 'non-employer' for any problems you might cause. I had a contractor insurance policy for a while when working as a consultant inside a chemical company, which had $1 million umbrella coverage for about $100 (15 years ago, so maybe some inflation, ymmv). You might also want to register your NAME as a fictitious name, dba, so you can perform the service you provide. Then the 'non-employer' could contract with the NAME company for on-site services for a rate other than minimum wage, say $10/month... then when the NAME company obtains money for services provided, you set up a bank account for the dba, and redeem all monies received for lawful money per 12 USC 411, thus you get no 1099's and pay no taxes.

  4. #34
    ManOntheLand
    Guest

    Red face 1099 presumes independent basis for taxation

    Quote Originally Posted by Topgun View Post
    My status is this: I've been redeeming lawful money since 2010 (thank you David!!) and have been fortunate not to work since then -no bank acct, no employee status, no 1099 contractor, no filing requirements. I am a clean slate, especially for 2013 and beyond. I need to work again, and am able to work in a place of fine dining. My only intent is to do things lawfully.

    I have heard that "under the table" work is not legal, but what defines that? Is it a company (entagled in state laws, taxes, etc) that pays the worker, therfore creating undocumented income? What if working for cash tips alone? The company pays you nothing, you are basically getting paid by the public... no different than a beggar or street busker on a subway, no? Can you AND/OR the company get in trouble if you and they agree on "free" work, ie. a volunteer? Must it be via private contract (and via verbage of lawful money for good measure?)

    Now, what if that is not agreeable (or legal), and one still wants to work for JUST cash tips, but to keep the fine dining's accountant and owner stress free, you agree to provide a SSN, verbiage of lawful money, and expect the company to issue a 1099 (this has been offered)... How can a company claim on a 1099 they are paying you? Aren't they saying you were paid money by yet several other 3rd parties?

    I am trying to place the best course of action over a time sensitive matter. I thank you all!

    The 1099 is used to create the illusion of another basis for taxation, apart from the basis that arises from the receipt of FRN's. If the payer insists on collecting an SSN from you, flip around some of the digits in your SSN (you can claim dyslexia if it ever comes up) and consider giving him an alternate address (not one the IRS already has for you). Without the correct SSN and with a different address, the IRS will never be able to track the payment to you.

    You can subtly note duress on the form he forces you to fill out with a "TDC" (for threat duress, coercion) so you can void the instrument later (especially if you are nervous about giving a false SSN, which Supreme Court says is not a crime BTW) but even this is not necessary if you are worried it will cause a problem with the payer. The duress is there whether you note it on the document or not.

    Be sure to demand PAYMENT IN LAWFUL MONEY AND sign your name "without prejudice" on all forms he forces you to fill out, so that you cannot be deemed to be voluntarily accepting any undisclosed benefit (such as receiving elastic currency) or be held obligated to any undisclosed terms or obligations (such as the fact that many of the words on these forms you are signing have custom definitions in Federal law, and thus the form creates a presumption that your work is Federally connected, creating a basis for treating the payment as "gross income" received in connection with a "trade or business" within the "United States".

    Years ago I declined to give an SSN to a payer, did not report the money he paid me, and never heard anything about it. I don't even know if he issued a 1099, but without an SSN it was pretty useless to the IRS.

  5. #35
    Quote Originally Posted by ManOntheLand View Post
    ... If the payer insists on collecting an SSN from you, flip around some of the digits in your SSN (you can claim dyslexia if it ever comes up) and consider giving him an alternate address (not one the IRS already has for you). Without the correct SSN and with a different address, the IRS will never be able to track the payment to you.
    With all due respect, what you suggest is a rather "slippery slope" to go down. Afaik, in general, payors request that you tender a Form W-9 (or a derivative/equivalent form) which must be signed under PoP (Penalties of perjury). Moreover, it also goes to your intent, and intent leads to your character. Could you stand before a jury and swear to your action being the "truth and nothing but the truth"? Don't think so ...

    Lastly, there's a special program in play by Auntie [IRiS] called "Identity Theft", which tracks just such activities and has a penalty-escalation provision in place as well. Upshot: don't do it -- you're apt to shoot yourself in the foot.

    However, one perfectly legal route I found workable is to demand that the payor produce a fW-9 that bears a valid OMB-Control Number. I'd also state that when s/he does, I'd be glad to comply. Though I could be wrong, after years of looking, I have yet to find such form. Auntie [IRiS] clearly understands the form's deceptive (read:entrapment) nature, but cannot mandate its use for the non-federally-connected business sector. How do I know this? Since IRC Sec. 6109 is the governing statute (mandating SSN-use for all federally-connected purposes), it would be simple to get fW-9 OMB-approved, but it is not (yet).
    Last edited by TDL; 05-18-13 at 05:43 PM.

  6. #36
    Quote Originally Posted by ManOntheLand View Post
    Years ago I declined to give an SSN to a payer, did not report the money he paid me, and never heard anything about it. I don't even know if he issued a 1099, but without an SSN it was pretty useless to the IRS.
    I also did that once. I was hired on Monday, fired on Friday. But no W2. I decided that it was better to have a job and let them steal SS and medicare than to not have a job.
    Blessed is he who keeps from stumbling over me.

  7. #37
    Check out the Diminished Money Counterclaim thread. By notifying the Fed there is really no need to involve the employer at all. And even if redeeming lawful money were to fail to get a Refund you are still better off usually to have a job and career.

  8. #38
    Quote Originally Posted by TDL View Post
    However, one perfectly legal route I found workable is to demand that the payor produce a fW-9 that bears a valid OMB-Control Number. I'd also state that when s/he does, I'd be glad to comply. Though I could be wrong, after years of looking, I have yet to find such form. Auntie [IRiS] clearly understands the form's deceptive (read:entrapment) nature, but cannot mandate its use for the non-federally-connected business sector. How do I know this? Since IRC Sec. 6109 is the governing statute (mandating SSN-use for all federally-connected purposes), it would be simple to get fW-9 OMB-approved, but it is not (yet).
    I would avoid such a confrontational approach, particularly since it's unnecessary. Remember, "payers" are typically legal morons. They don't care about OMB numbers; all they care about is "not getting in trouble". So here is what I did recently in a similar situation...

    I worked a job and after its completion was presented with a "Form W-9" and told it was "very important" to fill it out "right away". However, I told the lady who gave it to me, "This is the wrong form for me. Are you aware there are many other forms besides the 'W-9'?" She replied that she's heard of other forms before, but didn't know about them, much less have any of them with her. I told her that when I returned home I would supply her with the "most appropriate" form relative to me: a modified W-8BEN. (The "stock" IRS W-8BEN is to be avoided as it's chock full of nasty, presumptuous language repugnant to the rights of We the People.)

    So I later sent her the modified W-8BEN form - certificate of foreign status - and told her they will be happy with this form because this is no 1099 reporting or backup withholding required with it. I send a long an excerpt of Publication 515 highlighted with the "Tip" that "Foreign persons who provide Form TIP W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting." The modified form also included a note that as a nonresident alien, I at no time during the year engaged in a "trade or business" in the U.S. I included no SSN or tax ID number. I did not hear a single peep of protest over this form, and I will not receive a 1099 or be subject to any "reporting" from this job.

    It's vitally important, though, that before using this form you have proper standing to use it. For that, you need admissible evidence of your nonresident alien (to the "U.S.") status - without that, your form W-8 could be rightly rejected. David's libel of review/evidence repository may be one approach to accomplish that, though I took a slightly different route of publicly recording my status documents, then verifying the notary, and certifying the verification with the State.

  9. #39
    ManOntheLand
    Guest

    No one can compel you into a contract.

    Quote Originally Posted by TDL View Post
    With all due respect, what you suggest is a rather "slippery slope" to go down. Afaik, in general, payors request that you tender a Form W-9 (or a derivative/equivalent form) which must be signed under PoP (Penalties of perjury). Moreover, it also goes to your intent, and intent leads to your character. Could you stand before a jury and swear to your action being the "truth and nothing but the truth"? Don't think so ...

    Lastly, there's a special program in play by Auntie [IRiS] called "Identity Theft", which tracks just such activities and has a penalty-escalation provision in place as well. Upshot: don't do it -- you're apt to shoot yourself in the foot.

    However, one perfectly legal route I found workable is to demand that the payor produce a fW-9 that bears a valid OMB-Control Number. I'd also state that when s/he does, I'd be glad to comply. Though I could be wrong, after years of looking, I have yet to find such form. Auntie [IRiS] clearly understands the form's deceptive (read:entrapment) nature, but cannot mandate its use for the non-federally-connected business sector. How do I know this? Since IRC Sec. 6109 is the governing statute (mandating SSN-use for all federally-connected purposes), it would be simple to get fW-9 OMB-approved, but it is not (yet).

    My intent would simply be to exercise my right to make a living without being compelled into a commercial contract with the United States. I could certainly swear truthfully that I was under duress in furnishing an SSN and submitting the W-9 or W-4 form absent proof that I am required to furnish this information in the first place. Such duress makes these forms voidable and invalid. And it is not "identity theft" to provide an incorrect number if you are not knowingly using someone else's number. Supreme Court ruled just a couple of years ago that it is not unlawful to provide an incorrect SSN, if you are not knowingly using someone else's number.

    In a famous case involving Taco Bell years ago, a Federal Court established that a SSN could not be required for working in this country. SSA has admitted this as well. A payer who compels the use of a SSN is in violation of the law and exerting undue influence. You are therefore under duress and the W-9 and W-4 is voidable in any case.

  10. #40
    ManOntheLand
    Guest
    Quote Originally Posted by John Howard View Post
    I also did that once. I was hired on Monday, fired on Friday. But no W2. I decided that it was better to have a job and let them steal SS and medicare than to not have a job.
    I agree it is best not to bite the hand that feeds you. To clarify, in the situation I described I was working as an "independent contractor" for the payer, he neglected to get an SSN from me or have me fill out a W-9, so I never had to "refuse" to give an SSN, until after the end of the year, when I no longer worked there. I mentioned this only to illustrate that without a valid SSN, it is much harder for Auntie to track payments made to you. Probably impossible if you give an address to the payer that Auntie does not have on file for you and/or use a slight variation of your name.

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