That is, the effect on society is worse to encourage other people to cheat or commit other wrongs, than it is to do so yourself in secret. When one cheats in secret, he doesn't encourage other people to do so.
I don't have a business and don't get many checks.
But I'll tell this story. I was selling my cargo carrier because I was forced to buy a lighter one. The woman on the phone went into detail about how they hoped to use one like mine on vacation.
At the end of the conversation, she said her husband was a minister and asked me if I would give it to their church and take a tax deduction. She never said a thing about using it for church business.
It's barely used, good as new, better than new with my reflective striped tape and carpet bumpers, and assembled by me, and I have the original receipt, where I paid more than they charge now, so I could surely save on taxes 30% of the original cost, which is as much as I can sell it for, but no way am I playing her stinking little game.
And I wouldn't attend her church either.
I'd make the check out to the company (especially if its listed on the permit). Thats how I did it with our granite contractor in AZ. They wanted the check 'personal' to get the cash right away because (I found out later) the outfit was going out of business and they didn't want to mistakenly leave any $$ for their creditors. In theory, if I hadn't paid "the company", I believe there could have been 'creditors' come after me for a 'company' bill not paid.
No one ever said all contractors are honest. But you think making the check out after the job is done to the individual who did the work or his company name is going to protect you somehow from the contractor? The job is done and was apparently completed to his satisfaction. You have the cancelled check as proof that payment was made.
If in the initial negotiation he asks me to pay him cash or make out a check to another entity
Oh, so you want a receipt before the job is even started. That makes a lot of sense. And if you have any issues or doubts about permits, that has zippo to do with how the check is made out and should be dealt with seperately. And again, your cancelled check is proof that payment was made. Plus you should get a signed receipt or the agreement marked paid when you hand over the check. Geez, this ain;t rocket science.
And I hope you realize that in many cases, ie sole proprietorships, the individual and the company are legally one and the same.
Yeah, it's called escheat.
There's a fine line between "properly figured amount" and fudging. The odds that everyone would agree on what you considered proper are rather slim. You makes your choices, you takes you lumps.
I frequent garage sales. I'm always looking for a bargain, and have had at least my share of luck in finding them at garage sales. At a recent one, I bought a Trek fully-suspended bike for my sister, a Physical Training study course for my nephew, a Vornado fan for me, and a few other things. The woman tallied it up and said $16. I was a bit embarrassed by the low price and asked her if it was okay if I gave her $20 to keep it simple. I knew that the people were trying to raise some money, they had a few little kids running around, and the $4 wasn't going to bankrupt me.
I have a friend that would have offered her 25 cents for all that stuff if she'd asked for 50 cents. If she'd asked for a dime he would have asked to have it for a nickel. He looks at things in a different way. He's still a good person.
R
Right. If you shit in private, it's not s*****ng. There's way too much of that "what you don't know won't hurt you" stuff going on in the world.
The bottom line of what you are saying is that you don't want to feel that anyone is paying less than their fair share of the tax - less than what _you_ consider to be their fair share of the tax.
I'm not on this planet to impose my views and morals upon others. There's also way too much of that stuff going on in the world.
RRicodJour wrote: ...
The former yes, the latter no...what I _don't_ want (and a prime reason as noted earlier for using the company name as opposed to individual) is the deliberate underreporting of business income subject to self-employment taxes, etc., which afaict would be the only reason to care how the check was made out.
This entire thread had degenerated into "is the person the same as the DBA and/or corporation". If it is, then some people contend that it really doesn't make a different. If the contractor is a weasel and not paying taxes on it, it's no skin off your teeth.
Setting aside the insurance issues, the 1099 issue, and a whole bunch of other assumptions; you need to remember two things. 1. Many people think that this person is a weasel for asking. 2. It has been ASSUMED that the person saying "make the check out to me" is in fact the owner of the company. If the guy is a weasel, he it may be that he is trying to scam the owner. Maybe he's an employee and he's just going to pocket the bling and move on to the next project.
I think MC's point is valid. If the contract is in some name, write the check to that name. It provides you with additional protect at no cost. It keeps the real owner from coming after you.
I think MC's point is pretty valid becaus
DPB, have you ever been at a BBQ and had a couple of beers and driven yourself home? Did you stop at the police station and turn yourself in? I'm sure you've had friends/kids have a couple and drive themselves home. Do you alert the cops and give them the license plate number? Have you ever exceeded the speed limit? Do you send money to the traffic violations boys? Send money to the insurance company since your rates should have gone up if you were caught? I could go on, but you catch my drift. Let he who is without fault, right?
Wishing people would do the "right" thing (right thing in _your_ eyes) is fine, trying to enforce your wishes is something else entirely. You may be comfortable playing daddy to other adults, I'm not.
As I said from the beginning, I would not be happy about the contractor surprising me with a request for payment to himself personally. I like things to be spelled out up front. You can say yes or no to the request. Just don't try to sell those actions as being "for the good of the people", because that's not what it is at all, and you know it.
RPat wrote: ...
Yes and no...tax evasion in general is "skin off" the collective group...
I hadn't added that possible scenario into the mix as it seemed a little hard to execute in the particular case. The "asking" came in the form of a handwritten request at the bottom of an invoice. Hence, unless the whole invoice is a fake including the return address it would take an "inside job" by someone other than the owner to intercept the check when it arrives, etc., to get the benefit.
In general, the simplest explanation is usually the most nearly correct and I think the simplest is the fella' wants to either simply not report the income or only report it as personal, not business, for tax purposes.
Of course, as someone else has noted, the business could be in deep financial trouble, have judgment(s) against it, etc., etc., that he's trying to avoid paying as well. If that's the case, it might behoove the OP to at least attempt to ensure that the contractor has paid (or does pay) _his_ suppliers to avoid a possible contractors' lien on his property on down the road. Remote chance, in all likelihood, but stranger things happen.
Then again, _just maybe_ there's a completely innocent and "up and up" explanation, too, and we're all either just too cynical or dumb to figure out what it is. :)
It seems that way to me -- the invoice came on a letterhead-->pay the invoice not something/someone else.
imo, ymmv, $0.02, etc., etc., ...
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...Lecture snipped...
Ok, we agree...
All I did was recommend to OP to say "No" to the request by writing the check to the name on the invoice letterhead, not the personal name at the bottom, so it seems we also agree...
Well, you seemed to have made a leap here I didn't take. I said there was a basic reason behind my logic.
Why that seems to have sent you over the edge I don't know.
Yes, I _do_ have a problem w/ tax evasion as a general premise. Whether I have or haven't ever slipped and done less than an ideal action on occasion doesn't seem to me to be of any import nor concern or yours, either.
I have a cancelled check that says I paid someone something. If the name on that check does not match the name on the permit (the one who pulled the permit), there is no way I'm writing the check to another individual. Several years ago I had some work done by a 'reputable' contractor. He asked that I pay for the material up front, about $800. He also asked me to make the check out to his supplier so that he didn't have to run to the bank, deposit it and then write another check to his supplier. Foolish me I complied. When he completed the job he asked me for a check or cash 'in total'. I reminded him of the $800 check I wrote out to his supplier but he had a severe memory lapse and insisted that I either give him a receipt showing the payment to him or to pay up. I refused. He harassed me and threatened a lien but after a call from my attorney he backed off never to be heard of again. As I said in a previous message: "In God We Trust.
Cutting a check directly to a supplier is a major red flag. I wouldn't do it without lots of verification, signed receipts from both contractor and vendor, and a long history with the contractor. Glad you didn't get hung up to dry on yours.
R
Which proves my point. You had the cancelled check made out to the supplier. So, what's the big deal? You deducted the $800 from the final payment. No different than if the guy showed up at the end of the job and asked for an extra $800 on top of the contracted amount, which he could have done too. Or if you had paid him the $800 as a stage payment and he denied you did pay him. Who you made the check out to made zippo difference. You have the proof in black and white. In fact, I'd rather make it out to the supplier, because at least you know it's going to the supplier for materials, instead of the contractor using it for beer. Of course, you still don't know it's for your materials, but it's at least a little better.
And getting all wrapped up in what name is on the permit, IMO, has very little bearing on the payment. The issue is who did the work. You could have one construction permit that covers mutiple contractors, so that issue makes little sense.
Damn, and I worked so hard on the thing! I hate editors. ;)
Usually we do. If we always agreed I probably wouldn't like you so much.
Whether it's in the memo field, a signed receipt, whatever, you're just protecting your interests and there are plenty of ways to do that. I just don't see the need to get into guessing the contractor's motivation and all of that. If you have a question, ask it. If you don't like the answer, do what you feel is best.
Your replies have been reasonable, though I don't necessarily agree with them. Some of the other replies are just daft.
DPB, this isn't an edge. It'd take a nifong load more to set me off.
Exactly! I'm not living your life - I have my hands full with my own. That's all I was suggesting about the issue at hand. Don't try to live a contractor's life for them.
R
Ain't science wunnerful? :)
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Dang! You WOULD go and throw _that_ in there... :)
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I simply recommended my choice in how to protect my interest best for the specific case--really no more, no less. If an invoice is presented from an entity, imo payment should go to that entity. A memo field certainly would have some bearing, but whether there's any difference in legal status if push came to shove in a formal dispute resolution I don't know -- I simply know it would be unequivocal if the check were indeed made to the entity which seems my best protection. That it also provides at least some assurance that the recipient be required to follow the rules of the game, so to speak, is a side benefit.
(As a sidelight, if the invoice had actually been submitted on a scrap of paper in the guy's handwriting and only his signature below it, I almost certainly would have paid it that way w/o questioning it -- it's the dichotomy of a prepared invoice and the written request in contradiction to it that raises the flag. IOW, imo the contractor brought this on himself in this case. Although if he had up to this point made proposals on nice forms and presented business cards, etc., I might have then done the "why no inovice?" question. It all depends on how it "feels" overall and this just doesn't seem legit.)
That I can't see any other reason than a desire to subvert those rules (or other similar ones as in the judgment issue, etc.) is certainly part of it. I look on it kinda' like locks -- they don't prevent the determined from breaking and entering, but the do serve to keep the basically honest that way. I like to spread good wherever and whenever I can... :)
Are we done now (are we there yet)? :)
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For a thought experiment to illustrate the difference -- think of suing that same dentist personally and imagine how how high the barriers are between his personal assets and those of the business under that name! The probability of you getting to the proceeds of that check you wrote with his name on it are pretty miniscule... :)
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Think you'd do any better suing a contractor? He probably leases all his equipment from his wife.
This thread really is one of the silliest ever. If the contractor wanted to evade taxes, he'd want cash, not a check. If you are not willing to go along (if that was his intent) then next guy will and it does not matter since he still has to claim some income, be it your or the last/next person.
Trying to sue a contractor is not easy since most assets are in some other name anyway, or will be the day before he is served court papers.
To me it boils down to this. I hire ABC Corp to do a job. ABC Corp pulls permits and does the work. I'm going to pay ABC Corp for the job they did. I don't care what the contractor does or wants to do with the payment. It's not my problem. I just want to know that somewhere down the line ABC Corp is not being sold to someone else who looks in their books and finds I never paid the corp. for work done and files a lien or that the contractor doesn't try and pull anything shady on me. I'm sure if I paid him with a check with someone else's name and address on it he wouldn't accept it.
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