Bee's Knees (& other MN preparers)

[Mike Mac]

Not sure if you have many Contstruction Contractors among your clients but, did you notice MN Fact Sheet #18 for 2009? Looks like constructions contractors will have to withhold MN income taxes at a 2% rate for any sole proprietor construction people that they sub-contract anything out to (if the annual amount will exceed $600). I've got some young, single guys who this will apply to. I can hear them crying about all the extra paperwork this will involve for them already! It seems I have to talk to them about the importance of accurate records every year as it is now.

[Bees Knees]

That is one of the things on my list of things to do before I send out my client letters. I need to read that new law. I don't have any answers yet at this time...

[Bees Knees]

http://www.taxes.state.mn.us/taxes/withholding/tax_information/frequently_asked_questions/withholding_construction_contractors_faq.shtml

Here is the link to the new law...

[Zee]

Wow! In this current economic situation, this will probably spread to other states quickly (or something like it).

[JON]

Sign

up to become an independent contractor "licensed" first-then once you are paid over $600 from one they have to withhold on the entire $600 they did not previous w/h on.

[Nashville]

Maybe It Needs To

Wow! In this current economic situation, this will probably spread to other states quickly (or something like it).

This really might not be a bad idear. Rag-tag construction business is the epitome of non-reporting, and puts people on 1099s simply to avoid starting a payroll. This is so commonplace in the industry it's not even funny. Some of them DO have a payroll, but the worker tells them he doesn't want taxes taken out, so the employer plays along with it and puts him on a 1099 anyway.

There would be weeping and gnashing of teeth and No Joy in Mudville, but if the Federal were to require the PAYER to a mandatory 25% withholding, much of the tax filing and collection problem with these folks would evaporate. Some of these guys give out fake SS#s so their 1099 won't create a filing requirement. If the 25% withholding were in place, the fake SS# would derail the gross payments, but also would deny the withholding. In most cases, a non-filer would simply lose a potential refund.

I guess those who are avoiding taxes and child support payments would have to go to Mexico if this happened.