Sec. 1706 of the Tax Code

Fri Dec 9 14:24:27 MST 2016

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.

And I'm resisting the urge to lecture you on manners and propriety. You
definitely have it coming.

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.

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.

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.)

Just a thought. And remember: you asked.

- Vara
- www.facebook.com/vara.lafey
On Dec 8, 2016 5:10 PM, "David Schwartz" <newsletters at thetoolwiz.com> wrote:

> This thread IS about my original grievance — Sec. 1706 of the Tax Code
>
> It says so right there in the Subject line.
>
> You’re a real estate professional lecturing computer consultants on stuff
> that works nicely in the real estate profession.
>
> It can be harmful in THIS profession. Because of 1706. Which has nothing
> to do with either LLCs or Real Estate.
>
> But there ARE companies who WILL NOT HIRE SINGLE-MEMBER LLC’S AS
> CONTRACTORS for gigs in computer-related high-tech gigs.
>
> I’m not aware that situation exists in real estate. Are you?
>
> 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?
>
> THAT is the topic at hand. It’s irrelevant how simple it is to set up LLCs
> if people won’t hire your LLC.
>
> If that was the case in real estate, you probably wouldn’t be using them,
> right?
>
> -David "The Tool Wiz" Schwartz
>
>
>
> On Dec 8, 2016, at 6:48 PM, Vara La Fey <varalafey at gmail.com> wrote:
>
> I was clarifying generalized things for the poster who mentioned LLC as a
> suggestion from his accountant.
>
> Was that poster you?? Then you're welcome. Was it someone else?? Then
> correct my errors or kindly stick to your original grievance.
>
> - Vara
> - www.facebook.com/vara.lafey
> <https://u2206659.ct.sendgrid.net/wf/click?upn=tzJbcg2o-2FNh3kfIF32sRUUEfAUrPlRdODloCrKUTDLEe1Xr5sB7TGzxKSs-2BD8fg9_6lpMB7VLnN-2Fj9-2FEErg8-2F-2BMBpb5QxlByTgv2M3fbWD9ebvC-2BWrN3h7jImK8EVWYBeKRW4yrs59mwQltWw1TlFtLCMC-2B5cnU0264VQjgJOC5GFzr-2Bj4wik2Mv85C3Cc4xoI-2FBtmaMZLU1X7JvFsTPKDww1VCf4TriziZJkbteHegMvMb8m0Rqxic0CFQ8MZHpGYphK-2BxTba4RvxbDlPQhdQ4syk2Mv2OGBpGOXujSqWiw-3D>
> On Dec 8, 2016 4:39 PM, "David Schwartz" <newsletters at thetoolwiz.com>
> wrote:
>
>> I’m not sure what the point of these “Rah Rah for LLC!” posts is all
>> about. Nobody has said anything to the contrary.
>>
>> 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.
>>
>> 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.
>>
>> 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.
>>
>> 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.
>>
>> 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.
>>
>> But if he rules the person should have been treated as an “employee”,
>> both the person and the erstwhile “employer” just got nuked.
>>
>> 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.
>>
>> 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.
>>
>> 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?
>>
>> Again, if you’re not in the high-tech industry, this does not apply to
>> you.
>>
>> 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.
>>
>> -David "The Tool Wiz" Schwartz
>>
>>
>>
>> On Dec 8, 2016, at 4:53 PM, Vara La Fey <varalafey at gmail.com> wrote:
>>
>> 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.
>>
>> 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.
>>
>> 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.)
>>
>> Good luck!!  :-)
>>
>> - Vara
>> - www.facebook.com/vara.lafey
>> <https://u2206659.ct.sendgrid.net/wf/click?upn=3cK2FVJjyu2N-2Bxco034fZnnbK2LIZIfnojzH-2BPzZg719bV7hL2TJnC2UduzrwTqYFT6KRTGnVKmzvcAKMPt79XrrgQnt-2BSNUlminq-2F76bJx9ZjtqcTQrqktkVt4owoc319cITVAwLk-2BOQMb9wm1aTEIeL5bE5CnOiigdLaja-2FV7Nhw7GT4DrHEkMbdEKMmavkjE7veYmbT4e6KFkih-2FOxCTHdQNYHVIEz-2B4ypziKQc5XHN4kB1j-2FuhIDb2ikWU6RqN2N9p1qXuvZXynCL54yGwQvOjgNy0XcR3VhYdauJ-2FQNDIqPlox23BTST1xXhVNe4uNxMdKKQ8OhwWoSEfRY4Pye7JrdEYC64eX4TPd-2FykuUI9gWuluO7q8z-2BoeZI6oQG7v-2FFWz1E-2Feua1JgTZg87TAeBjCONsmnCgke31l0jifmIC-2Fx407Vq64ZCPjWwvQFos-2BRVvdfSvT8ttejqNvbDC07xaHE9-2BnB1e17N6sF8aMKmoNsRtw4jr1BVKxR1HbRT28CKz-2FQL9-2BSS4yOGPjOSQ-3D-3D_6lpMB7VLnN-2Fj9-2FEErg8-2F-2BMBpb5QxlByTgv2M3fbWD9ebvC-2BWrN3h7jImK8EVWYBeKRW4yrs59mwQltWw1TlFtIalWYkC6-2BF4-2BmkGxzJjiEf-2FEMGTdnQSCEQb-2FkA5BsemQxQ82GjNODfGfeDaXALKA2BZrmTTIiKn1kE24MgZmYTbNFM39OPqhcL1fmFSc6wNFRy6l7kS2qaGu9LkMgNSAXGzr9nuctJU3D8efy84jvY-3D>
>>
>>
>>
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