KEEP UNCLE SAM OUT OF YOUR POCKET

Salon Today recently published an article I wrote on year-end tax planning. Keep Uncle Sam Out Of Your Pocket includes some effective tax strategies to use by the end of 2009 to help save on next year's taxes. Click on the link to read the article in its entirety.

Also, don't forget to check out Salon Today at www.salontoday.com.

Larry Kopsa CPA

HAVING PROBLEMS BORROWING MONEY? YOU ARE NOT THE ONLY ONE.

Quarterly decline in bank lending is largest since 1984

Banks cut back the amount of money loaned to customers by $210.4 billion in the third quarter, the Federal Deposit Insurance Corp. said. The 2.8% reduction marks the sharpest drop since at least 1984. The biggest banks, which received billions of dollars in taxpayer bailouts, accounted for a disproportionately large part of the drop. "We need to see banks making more loans to their business customers," said Sheila Bair, the FDIC's chairwoman. The Washington Post (11/25) , CNNMoney.com/Fortune (11/24)

JUST FOR FUN

In case you missed it, the following blurb was published in this month's Reader's Digest.

'My Friend was at the beauty parlor when she overheard another woman rattle on to the manicurist about the sad state of her marriage. "Things have gotten so bad," she said, "I think I might ask for a divorce. What do you think?"'

"That's a serious matter," came the reply. "I think you should consult another manicurist."'

PLASTIC SURGERY TAKES A HIT IN HEALTH CARE DEBATE

Plastic Surgery Takes A Hit In The Health Care Debate and You Can’t Believe How They Do This

If I ran my business like the Congress I would be applying for unemployment right now.

It appears that the Senate, in its effort to tax everything possible to pay for health care reform (you’re right, I’m exaggerating) is forging ahead with its plan to tax cosmetic surgery.

Sen. Harry Reid (D-NV) has introduced a 5% excise tax on cosmetic surgeries that are “not necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma or a disfiguring disease.” In case you’re keeping score, that’s just half of the original tax that was earlier proposed.

I highly encourage you to read the various proposals involving health care reform floating around in the House and Senate. Only… it is really impossible to read since it’s a moving target.

This latest one? It’s actually a Senate Amendment to a House Bill. Follow me for a moment.

The bill number is HR 3590 – but there are four versions (!?) of this bill.

According to THOMAS (Library of Congress), the bill was introduced as the Service Members Home Ownership Tax Act of 2009 on September 17, 2009. It passed the House in October 2009 and was moved to the Senate. On November 21, 2009, a motion to proceed to consider the bill was passed, 60-39 (you can view the roll call here). That same day, Senator Reid proposed Amendment S.AMDT.2786 to the bill – a 247 page amendment. That amendment “in the nature of a substitute” is the Patient Protection and Affordable Care Act, introduced in the bill as follows:

SA 2786. Mr. REID (for himself, Mr. Baucus, Mr. Dodd, and Mr. Harkin) submitted an amendment intended to be proposed by him to the bill H.R. 3590, to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes; which was ordered to lie on the table; as follows:

An amendment “in the nature of a substitute” is a substitution of the body of a piece of legislation. The Senate describes it as “an amendment that would strike out the entire text of a bill or other measure and insert a different full text.” And yet, keep the name.

Huh? Now the bill is even longer. And better yet, it’s attached to popular items like modifying the first-time homebuyers credit for members of the Armed Forces. Who’d vote no to that?

Which brings me to my cynical question: Was the health care reform bill amended to another bill for purposes of consolidation and simplification? Or something else I don’t know.

As to the cosmetic surgery excise tax is specifically included in the Act at Section 9017 which adds, you guessed it, another amendment. It says, “Subtitle D of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new chapter: CHAPTER 49–ELECTIVE COSMETIC MEDICAL PROCEDURES.” The specific language regarding the tax can be found at Section 5000B(a).

For those of you that have read this far… if any of you, I have serious concerns about substituting and amending parallel bills with a number of versions especially when the title you retain is not related to the most meaty part of the bill. Why? Because it renders it virtually impossible for the average taxpayer to follow along.

Do I think that’s purposeful? I’m not saying that it is. But is it transparent? Absolutely not.

HEALTHCARE REFORM BILLS WOULD REQUIRE RESTAURANTS TO DISCLOSE CALORIES

US News Weekly reports that for the "most part, the Democrats' healthcare reform legislation focuses on insurance coverage and insurance reforms," but "there are proposals on the table, experts say, that at least begin to address the obesity problem. In one of the more far-reaching approaches, both the House bill...and Senate Majority Leader Harry Reid's bill...would require that all large fast-food chains and restaurants put calorie labels on their menus and displays."

QUESTION ON 1099s

Larry,

Could you answer a quick question? Several elderly friends have asked me to help them with administrative work in their home. I would probably do this on an ongoing basis and I am sure each would end up paying me more than $600 a year. I would report all of this money but am concerned for the people I would be doing the work for. Do they have to issue a 1099 for the work I would do for them? Could I just report the money quarterly without ever getting a form from them and have it be legal, I don’t want to get them into trouble?

Alison

Alison, if I understand it, you’re going to be kind of like a Girl Friday? Opening mail, paying bills, that sort of thing, at times that are convenient for you – and for a number of different people? Assuming that you can’t be classed as a household employee (which I think you’re not if my understanding of your situation is correct), then there is no obligation for your customers to report payments made to you.

Forms 1099-MISC are generally issued when payments are made in the course of trade or business. You do not need to report payments for personal items on a 1099.

For example, a painter paints my office for $1,000. I must give him a 1099. A painter paints my house for $1,000. I do not need to give them a 1099.

If your customers are making payments to you for services in much the same way that they would pay their hairdresser or a kid that occasionally mows the lawn, there’s no reason to submit a 1099 to you. Again, this assumes that you’re self-employed and that you control how the work is done. A self-employed worker also usually provides his or her own tools and offers services to the general public in an independent business – which sounds like what you’re doing.

If, however, you could be classified as a household or other employee (which would result in a form W-2 issued to you), or if you’re performing services for your customer’s trade or business (which would result in a form 1099-MISC issued to you), that’s a different story. I hope that helps. Good luck with your business!

Larry Kopsa CPA

THE JOB - URINE TEST (THIS IS A GREAT IDEA)

I don't know if any of you have seen this email that's going around. It's an interesting concept. The only thing that I would add is that if someone flunked the test, we would assist them in getting help as opposed to cutting them off cold turkey. Here is the email that has popped up on my machine.

"Like most folks in this country, I have a job. I work, they pay me. I pay my taxes and the government distributes my taxes as it sees fit. In order to get that paycheck in my case, I am required to pass a random urine test (which I have no problem). What I do have a problem with is the distribution of my taxes to people who don't have to pass a urine test.

So, here is my Question: Shouldn't one have to pass a urine test to get a welfare check, because I have to pass one to earn it for them? Please understand, I have no problem helping people get back on their feet. I do have a problem with helping someone sitting on their a** - taking drugs while I work. . . . Can you imagine how much money each state would save if people had to pass a urine test to get a public assistance check? I guess we could title that program, 'Urine or You're Out'.

Hope you will pass this along. Something has to change in this country, and soon!!!!"