Sec. 1706 of the Tax Code

Fri Dec 9 18:51:37 MST 2016

Sorry - getting tired of the rant fest - but since I was the one who bright
up the "REAL ESTATE" thing

Let's Look at 1706 and see just how true your statements are
(specifically item "d" EXCEPTION):

SEC. 1706. TREATMENT OF CERTAIN TECHNICAL PERSONNEL.

(a) IN GENERAL - Section 530 of the Revenue Act of 1978 is amended by
adding at the end thereof the following new subsection:

"(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."

(b) EFFECTIVE DATE. - The amendment made by this section shall apply to
remuneration paid and services rendered after December 31, 1986

So let's take stock of your comments:

< It can be harmful in THIS profession. Because of 1706. Which has nothing
to do with either LLCs or Real Estate. >
    -- and --
< 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. >

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.

My Experience with this (& LLC's): Let's do the questions and answer thing:

- Does 1706 apply to ALL engineers, drafters, designers, computer
programmers, systems analysts, and other similarly skilled worker - say
like architect?  - YES.
- Does the Reals Estate Industry employ more of these people than the
computer industry - YES.
- Do I have experience in the Real Estate Industry as one of these
professionals? - YES, Civil Engineer.
- Does the Real Estate firms and by extension there consultant firms you
worked for hire under 1706? - YES
- Do you have experience directly with 1706 in this field? YES
- In what capacity? - Business Owner, CEO, CIO, CTO, VP, SR Eng Manager,
Consultant, Contract employee as: drafter, designer, engineer, and
consulting manager.
- Have you hired people under 1706? - YES in AZ, UT, NV, CO, NM
- How many years in the Real Estate industry? - 25 yrs.
- What is your current occupation & for how long? - Software Engineer, 20
years.
- Have you experience 1706 in this position? - YES
- Have you used LLC's in lieu of 1706 in both industries? - YES

< But there ARE companies who WILL NOT HIRE SINGLE-MEMBER LLC’S AS
CONTRACTORS for gigs in computer-related high-tech gigs. >

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?

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.

On Fri, Dec 9, 2016 at 2:24 PM, Vara La Fey <varalafey at gmail.com> wrote:

> 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>
>>>
>>>
>>>
>>> ---------------------------------------------------
>>> PLUG-discuss mailing list - PLUG-discuss at lists.phxlinux.org
>>> To subscribe, unsubscribe, or to change your mail settings:
>>> http://lists.phxlinux.org/mailman/listinfo/plug-discuss
>>> <https://u2206659.ct.sendgrid.net/wf/click?upn=5DvWGaZUY8Sh5aRLWfQTKYiRLVzunonVk948p8WIzMe-2FXlJ9Cta8w8U9xoku9LrUSHNMJbSd3ZEwH-2BqnW2UHlA-3D-3D_6lpMB7VLnN-2Fj9-2FEErg8-2F-2BMBpb5QxlByTgv2M3fbWD9ebvC-2BWrN3h7jImK8EVWYBeKRW4yrs59mwQltWw1TlFtONEtphN-2FB8pS4lOjhWzGVsjUAlQ72Lzqp9gvLSjUPbeuryDYe7DStS-2FVNkLpf-2BUD9w8r2P4DD9USbxSZPKVOgBNYpVGYe4m-2FSmqVTL50bbxr7D1wR-2FlUtoY6F82bLN6agga25-2FrXh-2B3jaEpRAkOj5g-3D>
>>>
>> ---------------------------------------------------
>> PLUG-discuss mailing list - PLUG-discuss at lists.phxlinux.org
>> To subscribe, unsubscribe, or to change your mail settings:
>> http://lists.phxlinux.org/mailman/listinfo/plug-discuss
>> <https://u2206659.ct.sendgrid.net/wf/click?upn=5DvWGaZUY8Sh5aRLWfQTKYiRLVzunonVk948p8WIzMe-2FXlJ9Cta8w8U9xoku9LrUSHNMJbSd3ZEwH-2BqnW2UHlA-3D-3D_6lpMB7VLnN-2Fj9-2FEErg8-2F-2BMBpb5QxlByTgv2M3fbWD9ebvC-2BWrN3h7jImK8EVWYBeKRW4yrs59mwQltWw1TlFtLyjTrZKkGNgmpSVNwlmbDVoYd0L6GwblRgyALpXgS360kcPhySuWZTYiifHbIwzbdibpZN5d8FaGnjdL9cwzYwtcNnm4soP-2FrJTqB6kQQEZpr8QQfcnuFWD8e8u1HjC4-2FmeL0lKZ554XIHOM7YSRRw-3D>
>>
>>
>>
>> ---------------------------------------------------
>> PLUG-discuss mailing list - PLUG-discuss at lists.phxlinux.org
>> To subscribe, unsubscribe, or to change your mail settings:
>> http://lists.phxlinux.org/mailman/listinfo/plug-discuss
>>
>
> ---------------------------------------------------
> PLUG-discuss mailing list - PLUG-discuss at lists.phxlinux.org
> To subscribe, unsubscribe, or to change your mail settings:
> http://lists.phxlinux.org/mailman/listinfo/plug-discuss
>

-- 
James

*Linkedin <http://www.linkedin.com/pub/james-h-dugger/15/64b/74a/>*
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.phxlinux.org/pipermail/plug-discuss/attachments/20161209/520c5251/attachment.html>