Genesis 4:9 addresses the conflict between Cain and Abel when God asked Cain where was his brother. As we all know, Cain slew Abel, but was not about to fess up and uttered the immortal words to God “Am I my brother’s keeper?” This was Cain’s feeble attempt to throw God off the trail of the murder by asking the question (in layman terms) “Am I supposed to be his guardian, responsible for all he does?” Ok, maybe that’s my interpretation, but you get the understanding.
So why drudge this Biblical reference on the first Tax Day of the season? Well, March 15th is when all corporate tax returns are due. This is the first shearing of the sheep before the other major shearing next month on April 15. This year the new reporting of 1099 rules that went into effect are causing quite a stir in the accounting world. If you are in business for yourself or operate a corporation, who you 1099 now has been expanded. If you want the long, drawn out version of what to do that will make your eyes bleed, go to http://www.irs.gov/pub/irs-pdf/i1099msc.pdf. If you would prefer the Cliff Notes version as defined by Fox Business News, here is what to watch for:
“Who the new rules effect
If you were completing 1099 forms before, you will have to adjust to the new reporting requirements. This recent tax regulation applies to all for-profit corporations, except for tax-exempt organizations. If you report inaccurate or incomplete information, you may face penalty fines.
What has changed
The biggest change is mostly the volume of paperwork. Previous rules only required businesses to submit 1099 forms for payments greater than $600, typically made to independent contractors. New regulations will require 1099 forms for payments to most, if not all, of a business’ suppliers. Payments made to any corporation for over $600 will now require a corresponding form. This includes items like commission, fees, interest and even payment for property, such as construction equipment. For most companies, reporting these suppliers will result in a more forms. A 1099 form usually requires tax identification numbers (TINs) from both the payers and payees, and the new rules require more businesses to report their TINs.
Penalties for non-compliance
This new legislation raises the maximum penalties for reporting errors. The fine for failing to report a supplier has doubled to $100 from $50. Additionally, the maximum fine per business jumped: The ceiling for 1099 fines was $250,000, but under the new rule, businesses can be fined up to $1.5 million, and that number is anticipated to increase. Learning the new rules and complying with them can save you from a world of trouble.
So, staying on topic, the IRS is now requiring you to be your brother’s keeper. From a business standpoint, at least. AC unit goes on the fritz and you spend a $1000 to repair it, you have to get them to sign a W9 so you can 1099 them at the end of the year. What happens if they tell you to take a hike? Well, go back and re-read the report on penalties. The IRS is taking a full court press to make businesses that have real and legit expenses re-think whether or not they can now claim them. In what is already the worst economy since the Great Depression, Obama and his IRS thugs are shaking down American businesses one more time.
When a business files their return, they are accepting the responsibility for the opportunity America affords us. No where in the Constitution nor its Amendments does it mention that one business should be responsible for reporting the income of another. That is what this new rule is doing.
Oh – But there’s more!
If you operate a 501(c)3 and felt it was time to get the 501(c) 4 to upgrade your degree of activism, the IRS just decided to dig a bit deeper into your business. In February of this year, Texas conservative organization Waco Tea Party received a letter from the IRS regarding their application for 501(c) 4 status. What was sent by the IRS can only be classified as snoop to destroy. Asking questions regarding donors, who the groups plan on supporting, along with a whole host of questions that the IRS has no business inquiring on. Well, the Waco Tea Party and other groups have not folded. They have instead retained representation from the ACLJ on the issue and the ACLJ is wasting no time in sending notice to the IRS and firing back. He is the excerpt from the ACLJ site on the issue:
“The Internal Revenue Service (IRS) is demanding information from Tea Party groups nationwide – information that is clearly beyond the scope of legitimate inquiries – information that violates the First Amendment.
As we have already told you this week, we’ve been contacted by dozens of Tea Party groups that are facing what can only be described as an intimidation campaign – an IRS demand that the groups provide information about the internal workings of their organizations – questions that are simply out of bounds. Questions like: How do you choose your members? What’s their background? Who do they associate with? What do they discuss?
Take a look at some of these problematic questions for yourself. We’ve posted some of the most egregious questions taken directly from several of the IRS information demands. They are posted here. I want you to know we are moving forward aggressively. We now represent nearly 20 Tea Party groups nationwide and have put the IRS on notice concerning our representation.
And, in just two days, we’ve already seen more than 30,000 Americans sign on to our petition demanding that Congress conduct oversight hearings on this IRS action. We believe Congress needs to get to the bottom of what the IRS is doing. If you haven’t added your name yet, please do so here.
As I told the New York Times, this intimidation campaign is as onerous as what the IRS did to the NAACP in the 1950’s and is simply unacceptable.
Here are the facts. These organizations have followed the law and applied for tax exempt status for their activities as Americans have done for decades. The problem here is the IRS has gone beyond legitimate inquiries and is demanding that these organizations answer questions that actually violate their First Amendment rights of free speech and freedom of association.
The IRS information demands sent to the Tea Party groups are not in response to complaints of wrongdoing, but instead in response to applications by the organizations for 501(c)(4) tax exempt status. The IRS certainly has the authority to request certain information when processing applications for tax exempt status. But the truth here is this goes far beyond that legitimate purpose.
We are committed to defending our clients and are prepared to take the IRS to court if necessary. I will keep you posted.”
Read more on these issues at the ACLJ http://aclj.org/free-speech-2/defending-tea-party-from-irs-assault and at the Waco Tea Party website: https://www.wacoteaparty.org/Home_Page.html . They also have a link to their online petition to stop this garbage as well on the site.
If you represent a conservative non-profit and at are being harassed by the IRS, please contact the ACLJ immediately.
Also, send some bucks to the ACLJ.
Defending freedom of speech is never free.
Nor is being your brother’s keeper.