Re: Murrell's contract (WAS something about 1099s)
From: Thomas Neuburger <thomasn -at- twelfthnight -dot- com>
Tom -- Your income *must* have been reported to the
US Govt in some way (or someone broke the law), and
you should have gotten a copy of that notification.
That's what W2s and 1099s are, copies of income
reports to the Feds.
Sounds like you got unreported (by them) income.
I disagree. As someone else pointed out, if I was a true subcontractor,
they were not under a legal obligation to report what they paid me.
Here's my understanding: A company who hires a "non-corporation" vendor--that is, a subcontractor who is an independent contractor and a sole proprietor--is obligated to report that income to the subcontractor on a 1099 to the IRS on some form whose number I forget (1098?).
However, the penalty to the company for not reporting is something like $50. The penalty to the subcontractor for not reporting the income (whether they received a 1099 or not) is much steeper--think tax evasion and/or tax fraud.
Because the penalty for the client company is so truly lame, many companies ignore the 1099 reporting rules.
Sarah O'Keefe okeefe -at- scriptorium -dot- com 919-481-2701
FrameMaker Adobe Certified Expert Author, FrameMaker for Dummies
Scriptorium Publishing Services, Inc. http://www.scriptorium.com
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