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Subject:Re: 1099 (the history and the reality) From:Kat Nagel <katnagel -at- EZNET -dot- NET> Date:Thu, 4 Jun 1998 17:38:41 -0400
(Please use the address in my signature. Auto-reply may bounce.)
Sella Rush wrote:
>
> One little snag in getting your own tax id number:
>
> I had a short conversation with an IRS person last year, and brought up the
> subject as a solution to the contracting problem. This representative told
> me that the IRS is really cracking down on TINs--they publish a checklist to
> tell you if you really need a TIN, and if you don't really need one but get
> one anyway, there are "penalties" and all sorts of horrid ramifications.
>
> I don't know why this is (although I can guess--reestablishing credit, money
> laundering) and I don't know how true this is. Except that it did come from
> an IRS person who did seem to know her stuff in other respects.
I'd heard about that, and asked my accountant and a local IRS rep about it
last March. The accountant showed me the checklist---it's basically a
spiffed-up version of the old '20 questions' guidelines for identifying
independent contractors.
The IRS rep said the penalties aren't worth worrying about, as long as you
really do fit the profile of an independent contractor. Worst case: you have
to pay any back taxes you owe, plus interest and the standard penalty that's
charged for any IRS infraction (in our area, usually about 5% of what is owed
unless they can prove deliberate fraud).
The whole point of the exercise seems to be to keep from (a) confusing people
who wind up with multiple tax accounts when they only need one (apparently it
can get messy when it comes time to collect social security), and (b)
cluttering up the IRS computer system with inactive tax# account files.
Not a definitive answer---I don't think there's any such thing when it comes
to tax issues---but the view of another IRS critter with a good reputation for
being accurate and helpful.
--
K@
Kat Nagel, MasterWork Consulting Services Rochester NY
________________________ mwrk -at- aol -dot- com or katnagel -at- eznet -dot- net
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