<div dir="ltr"><div class="gmail_default"><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">Sorry - getting tired of the rant fest - but since I was the one who bright up the "REAL ESTATE" thing </font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">Let's Look at 1706 and see just how true your statements are (specifically item "d" EXCEPTION):</font></div><div class="gmail_default"><br></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">SEC. 1706. TREATMENT OF CERTAIN TECHNICAL PERSONNEL.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">(a) IN GENERAL - Section 530 of the Revenue Act of 1978 is amended by adding at the end thereof the following new subsection:</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">"(d) EXCEPTION. - This section shall not apply in the case of an individual who pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work."</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">(b) EFFECTIVE DATE. - The amendment made by this section shall apply to remuneration paid and services rendered after December 31, 1986</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><br></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">So let's take stock of your comments:</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">< It can be harmful in THIS profession. Because of 1706. Which has nothing to do with either LLCs or Real Estate. ></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"> -- and --</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">< If you’re in Real Estate, Accounting, Architecture, or whatever, 1706 does not apply to you. It’s very, VERY NARROW in its applicability — BY DESIGN. ></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">NOPE WRONG - The real estate industry which includes land development, municipal planning etc. actually covers ALL of the workers listed in the EXCEPTION d, and in more depth and in more diverse conditions.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">My Experience with this (& LLC's): Let's do the questions and answer thing:</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Does 1706 apply to ALL engineers, drafters, designers, computer programmers, systems analysts, and other similarly skilled worker - say like architect? - YES.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Does the Reals Estate Industry employ more of these people than the computer industry - YES.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Do I have experience in the Real Estate Industry as one of these professionals? - YES, Civil Engineer.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Does the Real Estate firms and by extension there consultant firms you worked for hire under 1706? - YES</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Do you have experience directly with 1706 in this field? YES </font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- In what capacity? - Business Owner, CEO, CIO, CTO, VP, SR Eng Manager, Consultant, Contract employee as: drafter, designer, engineer, and consulting manager.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Have you hired people under 1706? - YES in AZ, UT, NV, CO, NM</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- How many years in the Real Estate industry? - 25 yrs.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- What is your current occupation & for how long? - Software Engineer, 20 years.</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Have you experience 1706 in this position? - YES </font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">- Have you used LLC's in lieu of 1706 in both industries? - YES</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">< But there ARE companies who WILL NOT HIRE SINGLE-MEMBER LLC’S AS CONTRACTORS for gigs in computer-related high-tech gigs. ></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">YOU ARE EXACTLY RIGHT - So what are YOU going to do about it ... besides the grievance part? Or is this just a grievance thread where no one else can comment?</font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif"><br></font></div><div class="gmail_default"><font color="#0b5394" face="arial, helvetica, sans-serif">By the way should definitely hire one of the only 2 people completely qualified to help in this regard, a CPA or a tax attorney.</font></div></div><div class="gmail_extra"><br><div class="gmail_quote">On Fri, Dec 9, 2016 at 2:24 PM, Vara La Fey <span dir="ltr"><<a href="mailto:varalafey@gmail.com" target="_blank">varalafey@gmail.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><p>David Schwartz, you still choose not to understand that I was merely trying to help SOMEONE ELSE on the ease and process of LLCs. I didn't lecture anyone on I/T tax issues.</p>
<p>And I'm resisting the urge to lecture you on manners and propriety. You definitely have it coming.</p>
<p>I know you're scared and angry about the tax code and from what you say, I don't blame you. The IRS has always been a monstrous and unnecessary evil anyway. If you stop cavilling about me and focus on your grievance, you will educate people much better. Including me - and some years ago I spent some time on the lower rungs of I/T.</p>
<p>And BTW, I'm posting from and to PLUG, which is certainly not "primarily" for anyone but Linux users in the Phoenix area. So please take that bull to a different china shop.</p>
<p>My advice for those who won't hire you? Well.... LLCs can be members of other LLCs. I believe they can also be members of C and S corps. If so, you might look into banding together with some other contractors and hiring out as the new meta-corp. (You could just band together anyway.) </p>
<p>Just a thought. And remember: you asked.</p>
<p> - Vara<br>
- <a href="http://www.facebook.com/vara.lafey" target="_blank">www.facebook.com/vara.lafey</a><br>
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<div class="gmail_quote">On Dec 8, 2016 5:10 PM, "David Schwartz" <<a href="mailto:newsletters@thetoolwiz.com" target="_blank">newsletters@thetoolwiz.com</a>> wrote:<br type="attribution"><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div style="word-wrap:break-word">This thread IS about my original grievance — Sec. 1706 of the Tax Code<div><br></div><div>It says so right there in the Subject line.</div><div><br></div><div>You’re a real estate professional lecturing computer consultants on stuff that works nicely in the real estate profession.</div><div><br></div><div>It can be harmful in THIS profession. Because of 1706. Which has nothing to do with either LLCs or Real Estate.</div><div><br></div><div>But there ARE companies who WILL NOT HIRE SINGLE-MEMBER LLC’S AS CONTRACTORS for gigs in computer-related high-tech gigs.</div><div><br></div><div>I’m not aware that situation exists in real estate. Are you?</div><div><br></div><div>What advice do you have for those of us who have LLCs and someone will only hire us as contractors if we’re either a C or S Corp?</div><div><br></div><div>THAT is the topic at hand. It’s irrelevant how simple it is to set up LLCs if people won’t hire your LLC. </div><div><br></div><div>If that was the case in real estate, you probably wouldn’t be using them, right?</div><div><br><div>
<span class="m_8549165714822305142m_7852578441579769051Apple-style-span" style="border-collapse:separate;border-spacing:0px 0px;color:rgb(0,0,0);font-family:Helvetica;font-size:12px;font-style:normal;font-variant:normal;font-weight:normal;letter-spacing:normal;line-height:normal;text-align:auto;text-indent:0px;text-transform:none;white-space:normal;word-spacing:0px"><div>-David "The Tool Wiz" Schwartz</div><div><br class="m_8549165714822305142m_7852578441579769051khtml-block-placeholder"></div><br class="m_8549165714822305142m_7852578441579769051Apple-interchange-newline"></span>
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<br><div><blockquote type="cite"><div>On Dec 8, 2016, at 6:48 PM, Vara La Fey <<a href="mailto:varalafey@gmail.com" target="_blank">varalafey@gmail.com</a>> wrote:</div><br class="m_8549165714822305142m_7852578441579769051Apple-interchange-newline"><div><p>I was clarifying generalized things for the poster who mentioned LLC as a suggestion from his accountant.</p><p>Was that poster you?? Then you're welcome. Was it someone else?? Then correct my errors or kindly stick to your original grievance.</p><p> - Vara<br>
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<div class="gmail_quote">On Dec 8, 2016 4:39 PM, "David Schwartz" <<a href="mailto:newsletters@thetoolwiz.com" target="_blank">newsletters@thetoolwiz.com</a>> wrote:<br type="attribution"><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div style="word-wrap:break-word">I’m not sure what the point of these “Rah Rah for LLC!” posts is all about. Nobody has said anything to the contrary.<div><br></div><div>This list is primarily for people who work in the "high tech" (i.e., computing) industry, which is SPECIFICALLY what Sec. 1706 of the Tax Code deals with.</div><div><br></div><div>If you’re in Real Estate, Accounting, Architecture, or whatever, 1706 does not apply to you. It’s very, VERY NARROW in its applicability — BY DESIGN.<br><div><br></div></div><div>Sec. 1706 eliminates the “safe harbor” provisions for people who work as contractors, eliminating any “benefit of the doubt” that is historically given in most other professions, and instead subjects workers and the companies that employ them to a vague 22-point (IIRC) series of questions that an IRS Auditor can use to establish whether someone should be (or should have been) regarded as a “contractor” or “employee” for tax purposes.</div><div><br></div><div>The problem is, this is not something that is adjudicated when you hire on, and it does not matter how many reams of paperwork you sign that says it’s one thing or the other.</div><div><br></div><div>It’s a ticking time-bomb that applies in the vast majority of cases 3-5 years AFTER THE FACT when the person — usually hired as a contract worker at the time — is audited by the IRS for whatever reason, and the auditor reviews one of his employment situations and subjects it to the 22-point “test”. If he rules the person was acting as a “contractor”, all is fine. </div><div><br></div><div>But if he rules the person should have been treated as an “employee”, both the person and the erstwhile “employer” just got nuked.</div><div><br></div><div>The back-due taxes assessed to the “employer", plus accrued penalties and interest, typically amount to far more than whatever the person was paid. The company has no knowledge anything went awry until they suddenly get a bill from the IRS. </div><div><br></div><div>Meanwhile, the person in question now has to “unwind” any business expenses and deductions, as well as anything that depended on them such as retirement contributions, FICA/FUTA/UI set-asides, etc. Everything is up-ended and needs to be re-filed. </div><div><br></div><div>And to add insult to injury, the same auditor is likely to flag previous and subsequent years for auditing as well, and what do you think he’s going to rule on other contract gigs that were fundamentally the same situations as the first one he nuked? </div><div><br></div><div>Again, if you’re not in the high-tech industry, this does not apply to you. </div><div><br></div><div>Having a single-member LLC stand-in to protect you against such situations can be helpful, IF the company you want to work with is willing to hire you. Many are not because of problems discussed in other threads.</div><div><br></div><div><div><span class="m_8549165714822305142m_7852578441579769051m_5795026969846564395Apple-style-span" style="border-collapse:separate;border-spacing:0px;font-family:Helvetica;font-size:12px;font-style:normal;font-variant-ligatures:normal;font-variant-caps:normal;font-variant-numeric:normal;font-variant-alternates:normal;font-variant-east-asian:normal;font-weight:normal;letter-spacing:normal;line-height:normal;text-indent:0px;text-transform:none;white-space:normal;word-spacing:0px"><div>-David "The Tool Wiz" Schwartz</div><div><br class="m_8549165714822305142m_7852578441579769051m_5795026969846564395khtml-block-placeholder"></div><br class="m_8549165714822305142m_7852578441579769051m_5795026969846564395Apple-interchange-newline"></span>
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<br><div><blockquote type="cite"><div>On Dec 8, 2016, at 4:53 PM, Vara La Fey <<a href="mailto:varalafey@gmail.com" target="_blank">varalafey@gmail.com</a>> wrote:</div><br class="m_8549165714822305142m_7852578441579769051m_5795026969846564395Apple-interchange-newline"><div><p>Yes, you can be the only user ("Manager" and "Member") of an LLC. I did it for years in real estate, and still have my LLC.</p><p>IIRC the form takes more like 5 min. You publish your intended LLC in the Record Reporter for 6 weeks. I forget the cost, but it's fairly cheap and easy. And IIRC, the Sec of State office (or wherever I went) has a form for that too. </p><p>LLCs are almost zero maintenance and are not sublect to hostile takeover. And so easy that some real estate investors create one for each property, just to keep properties legally isolated from each other for basic liability reasons. An LLC name like "<street address>, LLC" is one of those. (So named cause the investor realized that pretty names would be silly and confusing.)</p><p>Good luck!! :-)</p><p> - Vara<br>
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