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Old 11-09-2012, 12:19 PM   #41 (permalink)
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Originally Posted by DJEtzel View Post
A boss of mine doesn't have a payroll system, she just writes us checks as independent contractors. She told me when she gave me my first check that she wasn't taking taxes out and certainly wasn't going to tell me I had to! Said it's my own business whether or not I file. She's a sweet lady though and certainly hasn't ever that I've witnessed lie or cheat anyone out of anything.
Your boss is not committing any fraud, so I find this example a bit interesting. Of course, your boss doesn't have to take any taxes from the amount she pays to independent contractors. And of course the independent contractors are solely responsible to pay their taxes that's why they charge higher rates. Your sweet boss is doing everything according to the law and she's sweet enough to tell you about your responsibilities so you are not owing big bucks to IRS. If I were you I would pay because your boss certainly has her books in order, and the amount she pays to independent contractors is appropriately listed.
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Old 11-09-2012, 01:27 PM   #42 (permalink)
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I'm sure everyone would rather talk about their dogs then taxes or fraud, and if anyone derailed this discussion it would me. But, as an auditor (I won't say which kind ), I feel compelled to throw a couple last comments out there.

Regarding payroll tax - the IRS has very specific rules about the classification of employee vs. subcontractor. DJETzel's employer could very easily be commiting fraud and this is one the IRS really hunts for. As an employer you do not want to be caught classifying someone as a contractor when the IRS thinks they should be an employee. Ouch. They will make that one hurt. The risk to the employee is much lower. In vact it isn't unusual for disgruntled ex "contractors" to turn their former employer in to the IRS.

Sales tax accross state lines - that gets more complicated as Chris suggested. It does not automatically mean sales tax doesn't apply and it often can mean that the responsibility for paying the sales tax transfers from the seller to the buyer. Getting caught is unlikely.
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Old 11-09-2012, 01:43 PM   #43 (permalink)
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Originally Posted by GSD07 View Post
Your boss is not committing any fraud, so I find this example a bit interesting. Of course, your boss doesn't have to take any taxes from the amount she pays to independent contractors. And of course the independent contractors are solely responsible to pay their taxes that's why they charge higher rates. Your sweet boss is doing everything according to the law and she's sweet enough to tell you about your responsibilities so you are not owing big bucks to IRS. If I were you I would pay because your boss certainly has her books in order, and the amount she pays to independent contractors is appropriately listed.
I think you misunderstood my point. As she told me, she made the comment in a funny tone about whether or not I have to... as if to say that if I were you, I wouldn't pay, and it's your business if you don't!
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Old 11-09-2012, 01:54 PM   #44 (permalink)
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Oh, ok, I did misunderstand, sorry about that!
@martinaa: great point! After observing how someone I know had to take a huge loan in order to cover IRS fees and fines and debts after an audit I take IRS rules very seriously
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Old 11-09-2012, 02:05 PM   #45 (permalink)
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Quote:
Originally Posted by GSD07 View Post
Your boss is not committing any fraud, so I find this example a bit interesting. Of course, your boss doesn't have to take any taxes from the amount she pays to independent contractors. And of course the independent contractors are solely responsible to pay their taxes that's why they charge higher rates. Your sweet boss is doing everything according to the law and she's sweet enough to tell you about your responsibilities so you are not owing big bucks to IRS. If I were you I would pay because your boss certainly has her books in order, and the amount she pays to independent contractors is appropriately listed.
While it's true that she doesn't have to withhold taxes on payments to independent contractors, she DOES have to report those payments to the IRS by filing a 1099 form annually. If she's not doing that, she's committing fraud, and since she told Danielle that it's up to her whether or not she reports it, that sure sounds like there's no 1099. If this employer were ever audited and it was discovered that she's paying people under the table, then both she AND the people working for her could be in trouble.

And as martinaa mentioned, you can't just say someone is an independent contractor and not an employee in order to avoid payroll taxes (and worker's compensation insurance!), there are strict guidelines that must be met. Independent Contractor Defined

Quote:
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
Something as simple as having set hours determined by your boss is enough to make you an employee and not an independent contractor.
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Old 11-09-2012, 02:13 PM   #46 (permalink)
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Payroll taxes, independent contractors, etc are WAY off topic. If you want to discuss these start your own topic in the chat forum. Anymore comments of this nature in this thread will be removed.

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Old 11-09-2012, 02:20 PM   #47 (permalink)
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Sales tax would only apply for in state purchases. If the buyer lives in a different state than the breeder, no sales tax would apply. Also in some states, the sale of livestock is exempt from sales tax, and in some of those dogs are viewed as livestock for tax purposes so would also be exempt. In other states, dogs are viewed as other commercial items and sales tax would apply. So whether tax should have been charged or not depends on the state's tax rules and whether the buyer lives in the same state or not. I believe some states would also have different rules for out of state purchases based on whether the buyer picked up the pup at the breeder's (thus the sale occurred in state) versus had the pup shipped.
As far as sales tax applying only on in state purchases - yes and no. If a seller was only licensed to collect sales tax in their own state, then they would not have to charge sales tax on out of state sales. But if it were considered a taxable purchase in the buyer's state, they would still be responsible for reporting the sale and paying the tax to their own state. Even if they failed to do so, the breeder wouldn't be liable for the sales tax because in order to charge tax on out of state sales you'd have to be licensed in each state you do business in. Obviously, nobody is going to do that.

I don't know anything about whether or not sale tax generally applies to the sale of dogs, but I'm sure that Chris is right that laws vary from state to state. I know in the state of California the sale is determined to have occurred where the buyer takes possession, but I don't know if that's typical of other states or not.

I work for a small business that sells all over California as well as out of state, and I prepare the quarterly sales tax returns for the company. We have at least 85 or 90 different tax districts in California, some for counties and some for cities, and we have to charge sales tax based on the district we are selling and shipping too, not where we're physically located. If we sell to an out of state company then it's up to that company to report that sale to the state they're located in and pay any applicable taxes, because we are only licensed in California. If we buy something from out of state that's not a resale item (where sales tax would not apply) and the company we buy from is not licensed to collect California sales tax, then it's our responsibility to report that sale on our quarterly return, and pay the sales tax directly to the state.
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Old 11-09-2012, 09:11 PM   #48 (permalink)
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I've paid for two dogs with a check but just ask the breeder beforehand. If they didn't want a check I'd be happy to get a bank check (which is basically cash without carrying all that cash around).
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Old 11-09-2012, 09:23 PM   #49 (permalink)
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Old 11-09-2012, 09:28 PM   #50 (permalink)
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What always bugs me~ raises a red flag~ is when breeders have on a website their payment options first and formost. It seems that is the focus of the breeders program more than what they are actually selling. If I'm in communication with a breeder I'd be buying from, whatever they are most comfortable with is what I'd do.
Breeder sites that are showing the visa,mastercard, amex etc cards ~that is a big turnoff to me(not sure why, but it just is).
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