Is this story about US tax office reasonable?
.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty,.everyoneloves__bot-mid-leaderboard:empty{
margin-bottom:0;
}
.everyonelovesstackoverflow{position:absolute;height:1px;width:1px;opacity:0;top:0;left:0;pointer-events:none;}
Ages ago I read a nice story that sounds quite reasonable, but might be complete nonsense. Here it goes:
A private detective in the USA has lots of lawyers as customers. And
they are notoriously bad at paying their bills. As a result, the
detective owes money to the IRS. He talks to the IRS on the phone, and
explains that he would love to pay his tax bill, but can't because so
many of his customers are not paying their bills.
The tax officer says "I'll come to your office on Monday morning.
Please have your 20 largest unpaid bills ready".
Monday morning, the tax officer arrives, takes the first unpaid bill
to a lawyer, and calls: "Hi, this is John Smith. I'm informed that you
owe private detective X an amount of $Y. Is that true?" Then the story
explains (whether true or false I don't know) that in the USA it is
quite possible to delay a payment legally, but it is illegal to
falsely claim that you don't owe a debt. So when the lawyers office
confirms, he says "I'm John Smith from the IRS, and I would ask you to
pay the amount you owe to the IRS. Today. " And two hours later, the
detectives tax bill is paid.
Question 1: Is it indeed illegal to lie about owing money?
Question 2: Would a company owing someone money that is past due payment be obliged to send the money to the IRS to pay the person's tax bill, assuming that the tax officer and the person owed state that this should happen?
Or is this story not reasonably possible?
united-states tax-law debt
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
|
show 2 more comments
Ages ago I read a nice story that sounds quite reasonable, but might be complete nonsense. Here it goes:
A private detective in the USA has lots of lawyers as customers. And
they are notoriously bad at paying their bills. As a result, the
detective owes money to the IRS. He talks to the IRS on the phone, and
explains that he would love to pay his tax bill, but can't because so
many of his customers are not paying their bills.
The tax officer says "I'll come to your office on Monday morning.
Please have your 20 largest unpaid bills ready".
Monday morning, the tax officer arrives, takes the first unpaid bill
to a lawyer, and calls: "Hi, this is John Smith. I'm informed that you
owe private detective X an amount of $Y. Is that true?" Then the story
explains (whether true or false I don't know) that in the USA it is
quite possible to delay a payment legally, but it is illegal to
falsely claim that you don't owe a debt. So when the lawyers office
confirms, he says "I'm John Smith from the IRS, and I would ask you to
pay the amount you owe to the IRS. Today. " And two hours later, the
detectives tax bill is paid.
Question 1: Is it indeed illegal to lie about owing money?
Question 2: Would a company owing someone money that is past due payment be obliged to send the money to the IRS to pay the person's tax bill, assuming that the tax officer and the person owed state that this should happen?
Or is this story not reasonably possible?
united-states tax-law debt
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
31
Seems like a bogus story. A private detective will likely use the "cash method" for accounting and so there is no tax due until he actually gets the money. And the likelihood of the IRS actually intervening is close to zero.
– Hilmar
May 26 at 21:20
6
This could be something for skeptics.stackexchange if you find a source of the story.
– Trilarion
May 27 at 9:20
3
Is the tax officer the brother (or other near relative) of the detective?
– EvilSnack
May 27 at 21:08
1
No statement about the IRS debt being linked to the PI's current financial situation- he could easily owe thousands of dollars. He spent the money he should have paid in tax.
– user2617804
May 28 at 9:46
1
@phoog Even then, highly unlikely. The PI would then book the income and take a deduction for bad debt. Also, if you can't pay, there is a process to work out a payment plan that is nothing at all like what is described. There are financials to fill out and a proposed payments to submit.
– ohwilleke
May 28 at 17:57
|
show 2 more comments
Ages ago I read a nice story that sounds quite reasonable, but might be complete nonsense. Here it goes:
A private detective in the USA has lots of lawyers as customers. And
they are notoriously bad at paying their bills. As a result, the
detective owes money to the IRS. He talks to the IRS on the phone, and
explains that he would love to pay his tax bill, but can't because so
many of his customers are not paying their bills.
The tax officer says "I'll come to your office on Monday morning.
Please have your 20 largest unpaid bills ready".
Monday morning, the tax officer arrives, takes the first unpaid bill
to a lawyer, and calls: "Hi, this is John Smith. I'm informed that you
owe private detective X an amount of $Y. Is that true?" Then the story
explains (whether true or false I don't know) that in the USA it is
quite possible to delay a payment legally, but it is illegal to
falsely claim that you don't owe a debt. So when the lawyers office
confirms, he says "I'm John Smith from the IRS, and I would ask you to
pay the amount you owe to the IRS. Today. " And two hours later, the
detectives tax bill is paid.
Question 1: Is it indeed illegal to lie about owing money?
Question 2: Would a company owing someone money that is past due payment be obliged to send the money to the IRS to pay the person's tax bill, assuming that the tax officer and the person owed state that this should happen?
Or is this story not reasonably possible?
united-states tax-law debt
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
Ages ago I read a nice story that sounds quite reasonable, but might be complete nonsense. Here it goes:
A private detective in the USA has lots of lawyers as customers. And
they are notoriously bad at paying their bills. As a result, the
detective owes money to the IRS. He talks to the IRS on the phone, and
explains that he would love to pay his tax bill, but can't because so
many of his customers are not paying their bills.
The tax officer says "I'll come to your office on Monday morning.
Please have your 20 largest unpaid bills ready".
Monday morning, the tax officer arrives, takes the first unpaid bill
to a lawyer, and calls: "Hi, this is John Smith. I'm informed that you
owe private detective X an amount of $Y. Is that true?" Then the story
explains (whether true or false I don't know) that in the USA it is
quite possible to delay a payment legally, but it is illegal to
falsely claim that you don't owe a debt. So when the lawyers office
confirms, he says "I'm John Smith from the IRS, and I would ask you to
pay the amount you owe to the IRS. Today. " And two hours later, the
detectives tax bill is paid.
Question 1: Is it indeed illegal to lie about owing money?
Question 2: Would a company owing someone money that is past due payment be obliged to send the money to the IRS to pay the person's tax bill, assuming that the tax officer and the person owed state that this should happen?
Or is this story not reasonably possible?
united-states tax-law debt
united-states tax-law debt
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
edited May 27 at 15:33
Martin Schröder
1692 silver badges15 bronze badges
1692 silver badges15 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
asked May 26 at 20:41
gnasher729gnasher729
13.1k15 silver badges32 bronze badges
13.1k15 silver badges32 bronze badges
31
Seems like a bogus story. A private detective will likely use the "cash method" for accounting and so there is no tax due until he actually gets the money. And the likelihood of the IRS actually intervening is close to zero.
– Hilmar
May 26 at 21:20
6
This could be something for skeptics.stackexchange if you find a source of the story.
– Trilarion
May 27 at 9:20
3
Is the tax officer the brother (or other near relative) of the detective?
– EvilSnack
May 27 at 21:08
1
No statement about the IRS debt being linked to the PI's current financial situation- he could easily owe thousands of dollars. He spent the money he should have paid in tax.
– user2617804
May 28 at 9:46
1
@phoog Even then, highly unlikely. The PI would then book the income and take a deduction for bad debt. Also, if you can't pay, there is a process to work out a payment plan that is nothing at all like what is described. There are financials to fill out and a proposed payments to submit.
– ohwilleke
May 28 at 17:57
|
show 2 more comments
31
Seems like a bogus story. A private detective will likely use the "cash method" for accounting and so there is no tax due until he actually gets the money. And the likelihood of the IRS actually intervening is close to zero.
– Hilmar
May 26 at 21:20
6
This could be something for skeptics.stackexchange if you find a source of the story.
– Trilarion
May 27 at 9:20
3
Is the tax officer the brother (or other near relative) of the detective?
– EvilSnack
May 27 at 21:08
1
No statement about the IRS debt being linked to the PI's current financial situation- he could easily owe thousands of dollars. He spent the money he should have paid in tax.
– user2617804
May 28 at 9:46
1
@phoog Even then, highly unlikely. The PI would then book the income and take a deduction for bad debt. Also, if you can't pay, there is a process to work out a payment plan that is nothing at all like what is described. There are financials to fill out and a proposed payments to submit.
– ohwilleke
May 28 at 17:57
31
31
Seems like a bogus story. A private detective will likely use the "cash method" for accounting and so there is no tax due until he actually gets the money. And the likelihood of the IRS actually intervening is close to zero.
– Hilmar
May 26 at 21:20
Seems like a bogus story. A private detective will likely use the "cash method" for accounting and so there is no tax due until he actually gets the money. And the likelihood of the IRS actually intervening is close to zero.
– Hilmar
May 26 at 21:20
6
6
This could be something for skeptics.stackexchange if you find a source of the story.
– Trilarion
May 27 at 9:20
This could be something for skeptics.stackexchange if you find a source of the story.
– Trilarion
May 27 at 9:20
3
3
Is the tax officer the brother (or other near relative) of the detective?
– EvilSnack
May 27 at 21:08
Is the tax officer the brother (or other near relative) of the detective?
– EvilSnack
May 27 at 21:08
1
1
No statement about the IRS debt being linked to the PI's current financial situation- he could easily owe thousands of dollars. He spent the money he should have paid in tax.
– user2617804
May 28 at 9:46
No statement about the IRS debt being linked to the PI's current financial situation- he could easily owe thousands of dollars. He spent the money he should have paid in tax.
– user2617804
May 28 at 9:46
1
1
@phoog Even then, highly unlikely. The PI would then book the income and take a deduction for bad debt. Also, if you can't pay, there is a process to work out a payment plan that is nothing at all like what is described. There are financials to fill out and a proposed payments to submit.
– ohwilleke
May 28 at 17:57
@phoog Even then, highly unlikely. The PI would then book the income and take a deduction for bad debt. Also, if you can't pay, there is a process to work out a payment plan that is nothing at all like what is described. There are financials to fill out and a proposed payments to submit.
– ohwilleke
May 28 at 17:57
|
show 2 more comments
1 Answer
1
active
oldest
votes
There is no general law making it illegal to lie about debts, or anything else. It is illegal to lie to a law enforcement officer in the course of an investigation. (And of course it is illegal to lie in court testimony or when otherwise under oath.) But it is in no way unlawful to decline to answer, unless a proper court order has been obtained, or other lawful means of compelling an answer. I would expect any law office to respond to such a question with something like "Am I/we being investigated? If so, send the appropriate notice and our lawyer will consider what we should tell you. If not, tell us what information you want, and we will consider and provide a written response in due course."
If a taxpayer has been found to be delinquent in paying taxes, in some cases a court order may be obtained seizing assets, including unpaid debts. But no IRS agent can make such a claim on the spot, and indeed for a client to make such a payment without such a court order, or the order of an IRS tribunal (or the creditor's written consent) would itself be unlawful and would subject the lawyer to a suit by the PI (Private Investigator).
When the lawyer pays a service provider, a 1099 must be filed with the IRS. If the PI is a corporation, a different form is used, but a record of payment is still required. As failure to timely file such a form is a violation of the tax code, an accusation of paying without filing would permit the lawyer to decline to answer under the Fifth amendment. If the lawyer did pay and did file a 1099 or other documentation, the IRS would know what had been payed, and would not need to confront the PI.
Also, as the comment by Hilmar points out, a PI would be likely to use the cash accounting method, and so would own no tax on work performed but unpaid (as yet). So unless the IRS agent thinks the PI was paid "off-the books" and is intentionally failing to report the payment, there would be no point to such a question. And if that were he case, the lawyer would be very likely to decline to answer.
I find the story quite implausible.
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
1
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
4
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
2
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
3
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
|
show 4 more comments
Your Answer
StackExchange.ready(function() {
var channelOptions = {
tags: "".split(" "),
id: "617"
};
initTagRenderer("".split(" "), "".split(" "), channelOptions);
StackExchange.using("externalEditor", function() {
// Have to fire editor after snippets, if snippets enabled
if (StackExchange.settings.snippets.snippetsEnabled) {
StackExchange.using("snippets", function() {
createEditor();
});
}
else {
createEditor();
}
});
function createEditor() {
StackExchange.prepareEditor({
heartbeatType: 'answer',
autoActivateHeartbeat: false,
convertImagesToLinks: false,
noModals: true,
showLowRepImageUploadWarning: true,
reputationToPostImages: null,
bindNavPrevention: true,
postfix: "",
imageUploader: {
brandingHtml: "Powered by u003ca class="icon-imgur-white" href="https://imgur.com/"u003eu003c/au003e",
contentPolicyHtml: "User contributions licensed under u003ca href="https://creativecommons.org/licenses/by-sa/4.0/"u003ecc by-sa 4.0 with attribution requiredu003c/au003e u003ca href="https://stackoverflow.com/legal/content-policy"u003e(content policy)u003c/au003e",
allowUrls: true
},
noCode: true, onDemand: true,
discardSelector: ".discard-answer"
,immediatelyShowMarkdownHelp:true
});
}
});
Sign up or log in
StackExchange.ready(function () {
StackExchange.helpers.onClickDraftSave('#login-link');
});
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
StackExchange.ready(
function () {
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2flaw.stackexchange.com%2fquestions%2f41454%2fis-this-story-about-us-tax-office-reasonable%23new-answer', 'question_page');
}
);
Post as a guest
Required, but never shown
1 Answer
1
active
oldest
votes
1 Answer
1
active
oldest
votes
active
oldest
votes
active
oldest
votes
There is no general law making it illegal to lie about debts, or anything else. It is illegal to lie to a law enforcement officer in the course of an investigation. (And of course it is illegal to lie in court testimony or when otherwise under oath.) But it is in no way unlawful to decline to answer, unless a proper court order has been obtained, or other lawful means of compelling an answer. I would expect any law office to respond to such a question with something like "Am I/we being investigated? If so, send the appropriate notice and our lawyer will consider what we should tell you. If not, tell us what information you want, and we will consider and provide a written response in due course."
If a taxpayer has been found to be delinquent in paying taxes, in some cases a court order may be obtained seizing assets, including unpaid debts. But no IRS agent can make such a claim on the spot, and indeed for a client to make such a payment without such a court order, or the order of an IRS tribunal (or the creditor's written consent) would itself be unlawful and would subject the lawyer to a suit by the PI (Private Investigator).
When the lawyer pays a service provider, a 1099 must be filed with the IRS. If the PI is a corporation, a different form is used, but a record of payment is still required. As failure to timely file such a form is a violation of the tax code, an accusation of paying without filing would permit the lawyer to decline to answer under the Fifth amendment. If the lawyer did pay and did file a 1099 or other documentation, the IRS would know what had been payed, and would not need to confront the PI.
Also, as the comment by Hilmar points out, a PI would be likely to use the cash accounting method, and so would own no tax on work performed but unpaid (as yet). So unless the IRS agent thinks the PI was paid "off-the books" and is intentionally failing to report the payment, there would be no point to such a question. And if that were he case, the lawyer would be very likely to decline to answer.
I find the story quite implausible.
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
1
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
4
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
2
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
3
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
|
show 4 more comments
There is no general law making it illegal to lie about debts, or anything else. It is illegal to lie to a law enforcement officer in the course of an investigation. (And of course it is illegal to lie in court testimony or when otherwise under oath.) But it is in no way unlawful to decline to answer, unless a proper court order has been obtained, or other lawful means of compelling an answer. I would expect any law office to respond to such a question with something like "Am I/we being investigated? If so, send the appropriate notice and our lawyer will consider what we should tell you. If not, tell us what information you want, and we will consider and provide a written response in due course."
If a taxpayer has been found to be delinquent in paying taxes, in some cases a court order may be obtained seizing assets, including unpaid debts. But no IRS agent can make such a claim on the spot, and indeed for a client to make such a payment without such a court order, or the order of an IRS tribunal (or the creditor's written consent) would itself be unlawful and would subject the lawyer to a suit by the PI (Private Investigator).
When the lawyer pays a service provider, a 1099 must be filed with the IRS. If the PI is a corporation, a different form is used, but a record of payment is still required. As failure to timely file such a form is a violation of the tax code, an accusation of paying without filing would permit the lawyer to decline to answer under the Fifth amendment. If the lawyer did pay and did file a 1099 or other documentation, the IRS would know what had been payed, and would not need to confront the PI.
Also, as the comment by Hilmar points out, a PI would be likely to use the cash accounting method, and so would own no tax on work performed but unpaid (as yet). So unless the IRS agent thinks the PI was paid "off-the books" and is intentionally failing to report the payment, there would be no point to such a question. And if that were he case, the lawyer would be very likely to decline to answer.
I find the story quite implausible.
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
1
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
4
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
2
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
3
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
|
show 4 more comments
There is no general law making it illegal to lie about debts, or anything else. It is illegal to lie to a law enforcement officer in the course of an investigation. (And of course it is illegal to lie in court testimony or when otherwise under oath.) But it is in no way unlawful to decline to answer, unless a proper court order has been obtained, or other lawful means of compelling an answer. I would expect any law office to respond to such a question with something like "Am I/we being investigated? If so, send the appropriate notice and our lawyer will consider what we should tell you. If not, tell us what information you want, and we will consider and provide a written response in due course."
If a taxpayer has been found to be delinquent in paying taxes, in some cases a court order may be obtained seizing assets, including unpaid debts. But no IRS agent can make such a claim on the spot, and indeed for a client to make such a payment without such a court order, or the order of an IRS tribunal (or the creditor's written consent) would itself be unlawful and would subject the lawyer to a suit by the PI (Private Investigator).
When the lawyer pays a service provider, a 1099 must be filed with the IRS. If the PI is a corporation, a different form is used, but a record of payment is still required. As failure to timely file such a form is a violation of the tax code, an accusation of paying without filing would permit the lawyer to decline to answer under the Fifth amendment. If the lawyer did pay and did file a 1099 or other documentation, the IRS would know what had been payed, and would not need to confront the PI.
Also, as the comment by Hilmar points out, a PI would be likely to use the cash accounting method, and so would own no tax on work performed but unpaid (as yet). So unless the IRS agent thinks the PI was paid "off-the books" and is intentionally failing to report the payment, there would be no point to such a question. And if that were he case, the lawyer would be very likely to decline to answer.
I find the story quite implausible.
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
There is no general law making it illegal to lie about debts, or anything else. It is illegal to lie to a law enforcement officer in the course of an investigation. (And of course it is illegal to lie in court testimony or when otherwise under oath.) But it is in no way unlawful to decline to answer, unless a proper court order has been obtained, or other lawful means of compelling an answer. I would expect any law office to respond to such a question with something like "Am I/we being investigated? If so, send the appropriate notice and our lawyer will consider what we should tell you. If not, tell us what information you want, and we will consider and provide a written response in due course."
If a taxpayer has been found to be delinquent in paying taxes, in some cases a court order may be obtained seizing assets, including unpaid debts. But no IRS agent can make such a claim on the spot, and indeed for a client to make such a payment without such a court order, or the order of an IRS tribunal (or the creditor's written consent) would itself be unlawful and would subject the lawyer to a suit by the PI (Private Investigator).
When the lawyer pays a service provider, a 1099 must be filed with the IRS. If the PI is a corporation, a different form is used, but a record of payment is still required. As failure to timely file such a form is a violation of the tax code, an accusation of paying without filing would permit the lawyer to decline to answer under the Fifth amendment. If the lawyer did pay and did file a 1099 or other documentation, the IRS would know what had been payed, and would not need to confront the PI.
Also, as the comment by Hilmar points out, a PI would be likely to use the cash accounting method, and so would own no tax on work performed but unpaid (as yet). So unless the IRS agent thinks the PI was paid "off-the books" and is intentionally failing to report the payment, there would be no point to such a question. And if that were he case, the lawyer would be very likely to decline to answer.
I find the story quite implausible.
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
edited May 28 at 3:17
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
answered May 26 at 21:21
David SiegelDavid Siegel
27.1k2 gold badges46 silver badges95 bronze badges
27.1k2 gold badges46 silver badges95 bronze badges
1
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
4
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
2
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
3
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
|
show 4 more comments
1
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
4
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
2
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
3
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
1
1
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
It's a shame. I liked the story :-) The point about cash accounting (it's only income and you only owe tax if/when the bill is paid) is something I completely missed.
– gnasher729
May 26 at 22:35
4
4
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
@gnasher729 Yes, but to me the point more telling is that an IRS agent just doesn't have the power to say "do this" and have people, esp lawyers, comply rather than say "where's your warrant / court order"
– David Siegel
May 26 at 22:53
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
A 1099 is usually not required when paying a corporation or LLC, and a PI would be insane not to be using one for all variety of reasons.
– chrylis
May 27 at 9:47
2
2
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
@chrylis The answer says: "If the PI is a corporation, a different form is used, but a record of payment is still required." Do you think that is incorrect?
– David Siegel
May 27 at 11:03
3
3
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
The lawyer (like any business) is required to keep its internal books, but the payment is not usually reported directly to the IRS.
– chrylis
May 27 at 21:07
|
show 4 more comments
Thanks for contributing an answer to Law Stack Exchange!
- Please be sure to answer the question. Provide details and share your research!
But avoid …
- Asking for help, clarification, or responding to other answers.
- Making statements based on opinion; back them up with references or personal experience.
To learn more, see our tips on writing great answers.
Sign up or log in
StackExchange.ready(function () {
StackExchange.helpers.onClickDraftSave('#login-link');
});
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
StackExchange.ready(
function () {
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2flaw.stackexchange.com%2fquestions%2f41454%2fis-this-story-about-us-tax-office-reasonable%23new-answer', 'question_page');
}
);
Post as a guest
Required, but never shown
Sign up or log in
StackExchange.ready(function () {
StackExchange.helpers.onClickDraftSave('#login-link');
});
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
Sign up or log in
StackExchange.ready(function () {
StackExchange.helpers.onClickDraftSave('#login-link');
});
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
Sign up or log in
StackExchange.ready(function () {
StackExchange.helpers.onClickDraftSave('#login-link');
});
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
31
Seems like a bogus story. A private detective will likely use the "cash method" for accounting and so there is no tax due until he actually gets the money. And the likelihood of the IRS actually intervening is close to zero.
– Hilmar
May 26 at 21:20
6
This could be something for skeptics.stackexchange if you find a source of the story.
– Trilarion
May 27 at 9:20
3
Is the tax officer the brother (or other near relative) of the detective?
– EvilSnack
May 27 at 21:08
1
No statement about the IRS debt being linked to the PI's current financial situation- he could easily owe thousands of dollars. He spent the money he should have paid in tax.
– user2617804
May 28 at 9:46
1
@phoog Even then, highly unlikely. The PI would then book the income and take a deduction for bad debt. Also, if you can't pay, there is a process to work out a payment plan that is nothing at all like what is described. There are financials to fill out and a proposed payments to submit.
– ohwilleke
May 28 at 17:57