OK, so it's not so much a moral quandry as a "What's worth fighting for quandry."
Some background. My ex business owese me money. They issue a payment every quarter. Some of it is interest, some capital gains, and some return of principal.
Because of this, I receive a 1099-INT from them every year. This form reports the amount of interest income they paid me. A copy is sent to the IRS, so the IRS knows how much interest income to look for on my 1040.
The instructions for 1099-INT say something like "Include all interest paid to recipient in calendar year 2004." Payments are due on the last day of the month (12/31, in this case), but penalties don't kick in until 15 days later.
This time, they were late with the payment. I received it on the 10th, before penalties kicked in. But, I had arranged to pick it up, drove to the office, and was told they didn't have time to print it out. My ex-partner promised to drop it off the next day (Saturday). No call, no nothing. Monday I call him, he says "Oh, I went out of town." He FedExed it to me.
After all this hassle, he's included the amount of this check, paid in January 2005, in the 2004 1099.
First question, to Boon or any other experts, am I right in thinking that if they didn't give me the payment until 2005, it's not supposed to be included in the 2004 1099? This isn't even the marginal case where they date the check 12/31 and mail it out on Jan 2. This check didn't exist until 1/10.
Second, to anyone, is this worth making a fuss over? The tax repercussions will net out by the end of the year, although I'll lose the use of a fair amount of money for 6-9 months or so. But somehow letting him get away with this seems like it might be inviting trouble down the road. Plus, it would be nice to be able to pay the taxes on this check spread out over 4 estimated tax payments.
Thoughts?
Dagonee
[ February 14, 2005, 04:18 PM: Message edited by: Dagonee ]
Posted by ClaudiaTherese (Member # 923) on :
Hmmm. Maybe a brief email, courteous and to the point, to feel out the situation?
Something like:
quote:Joe,
I noticed you included X in the report for calendar year 2004. Since the check wasn't cut until Jan 10, it belongs in 2005. This will make my own accounting more straightforward and accurate, as well. I appreciate you addressing this as soon as possible so that I can complete my paperwork for the fiscal year.
Thanks.
Dag
You thereby commit to nothing but accuracy and straghtforwardness, and you expressly assume his own interest in and desire to do the same.
I don't think it can hurt, and it might help. (Yes, I am being optomistic. )
Good luck!
[ February 13, 2005, 01:15 PM: Message edited by: ClaudiaTherese ]
Posted by rivka (Member # 4859) on :
quote: am I right in thinking that if they didn't give me the payment until 2005, it's not supposed to be included in the 2004 1099?
I had to check on this once, and it definitely should not have been included.
As to whether it's worth fighting, I don't know. Have you considered just sending a friendly "I think there was an error, please fix this" letter?
[edit: or what CT said better and faster]
[ February 13, 2005, 01:15 PM: Message edited by: rivka ]
Posted by Dagonee (Member # 5818) on :
I did that, with fairly close wording to what you (Edit: CT) proposed, expecting him to grumble and mutter and then say, "We'll get this out as soon as possible." Then he'd make me wait 2 weeks, and the world would go on.
His reply? "The payments and terms were identical to that of last year. There was a December 30, 2004 check date which coincides with the information for last year as well." Which doesn't even make sense to me, but there you go.
I replied highlighting the "calendar year" language in the instructions - no response yet. My decision now is, if he refuses, do I go further?
Dagonee
[ February 13, 2005, 01:18 PM: Message edited by: Dagonee ]
Posted by rivka (Member # 4859) on :
I begin to understand why this is an ex-partner. Yeesh.
Good luck.
Posted by Dagonee (Member # 5818) on :
You have no idea.
Posted by Beren One Hand (Member # 3403) on :
quote:But somehow letting him get away with this seems like it might be inviting trouble down the road.
This is an excellent point. You may have time to dance with him now, but when you start working as a lawyer you will not have the same amount of time to deal with this guy. There is a reason why so many doctors and lawyers are victims of investment scams.
I think you should take care of this now.
[ February 13, 2005, 01:31 PM: Message edited by: Beren One Hand ]
Posted by Kayla (Member # 2403) on :
I know someone who itemizes every other year. He also pays his property tax late by a couple of days every other year. That way, he has two property tax payments in one year, and itemizes and then no property tax in the other years, so uses a standard deduction.
I think the important thing here is for you to figure out what the tax ramifications are for you. Will it change how much you pay in taxes in either year? Less, more? I'd answer those questions and if it doesn't change anything, why put yourself through the stress of dealing with a jerk you kicked out of your life?
If, on the other hand, it would save you money to have two payments in one year and none last year, and itemize this year, then is the amount you will save worth having to deal with it?
Posted by ketchupqueen (Member # 6877) on :
I agree. You need to straighten this out now, and let him know that any funny business will not be tolerated in the future. Tell him that you have the dated documents, and if he would like to see copies, you will get them to him, but because you don't want to be giving inaccurate information to the IRS, you need this fixed. Imply that if he doesn't fix this, he's going to be dealing with the IRS (I'm sure he doesn't want that).
Posted by ClaudiaTherese (Member # 923) on :
I would say to push it, but I can see reasons to go either way. Still, like you, I think it is good to establish a history of proper, correct, and professional interaction.
I think this is a bit of a pissing on the tree kind of thing, actually. I am getting more comfortable with that myself, although I limit it to a single stream, precisely directed, and without any dribbles.
And I smile politely afterwards.
Methinks highlighting that the course he has mistakenly been pursuing is illegal might be helpful. Should you wish to be yet more discreet, you could pay a modest fee to have H&R Block do your taxes and notify him "on their advice," as you wish to do everything properly.
[Edit: I really get Kayla's point, and I think it is a good one. You have to take what it's worth to you into account. Some years ago I would've figured "why bother," but I've gotten so used to escalating jerkhood that I now figure it's worth the bother to nip things in the bud, especially when it is someone I can't avoid. Note that this represents a growing level of cynicism and disillusionment with my fellow creatures, something I'm not particularly proud of. But there it is.
So I pee on the tree, politely, and stare them down. At least, that's the hoped-for effect. Might come off as, er, less dignified and controlled. ]
[ February 13, 2005, 01:48 PM: Message edited by: ClaudiaTherese ]
Posted by Dagonee (Member # 5818) on :
Thanks, CT. I needed that. (Edit: This was not sarcastic.)
The person who does my taxes can change the return at a moment's notice, so I can proceed with tax preparation either way.
I think I'll move up to a phone call tomorrow. I'll proceed with them at least enough to make them consult someone who will tell them they are wrong.
I won't decide to escalate this to the IRS until I have to.
Dagonee
[ February 13, 2005, 02:28 PM: Message edited by: Dagonee ]
Posted by ClaudiaTherese (Member # 923) on :
(*wince
I forgot that it could be taken as a Catholic slam, Dag. Man, I'm batting in the negatives for Dobies lately. No more dobies for me! *crosses heart
sorry sorry sorry )
Posted by Dagonee (Member # 5818) on :
No, that's fine. They did it at the Church's urging, the Church needs to live with the results. It's also a good reminder about choosing ones battles well - not just for strategic reasons, but for moral ones as well.
[ February 13, 2005, 02:24 PM: Message edited by: Dagonee ]
Posted by ClaudiaTherese (Member # 923) on :
It wasn't the Crusades that came to mind, honest. Just that any search of historical events for 1099 seems to get kinda dwarfed by it.
And then the Catholic angle completely escaped me. Duh. I think I was raised so immersed in Catholicism that I think our history is the only history.
[Edit: was 1099 Advice and Moral Quandry, taken down to spare Dag's feelings, put back up to make sense of the thread and own up fully to my actions]
[ February 13, 2005, 02:29 PM: Message edited by: ClaudiaTherese ]
Posted by Dagonee (Member # 5818) on :
It was nice of you to go looking for a dobie. And in European history, the Crusade does overshadow most else that was happening.
Posted by ClaudiaTherese (Member # 923) on :
Well, "nice" is a bit of a stretch. I'll accept "annoying" and could be persuaded to swallow "inappropriately irreverant."
Posted by Dagonee (Member # 5818) on :
Bah. Don't give in to the dobie naysayers. Dobies cheer me up.
Posted by ClaudiaTherese (Member # 923) on :
Posted by Bob_Scopatz (Member # 1227) on :
I wonder if you could do your taxes this year w/out that 1099, and then include it next year since the money came to you in 2005, not 2004.
If you got audited, would the difference be so large that you'd be worried about paying the penalties? It'd be interesting to see whether this would trigger an audit of the ex-partner, actually.
There's a thought, cc: him on a letter to the IRS stating that this check was misapplied to 2004 earnings in violation of the law and see whether he ever does anything so stupid ever again.
You could just add a note saying "this is the letter I've been advised to send to the IRS explaining this situation should it not be cleared up by March 15th," or something to that effect.
You don't have to say that some idiot on a webboard is the one who advised you. Posted by Dagonee (Member # 5818) on :
Ooh, that's good, Bob. That's real good.
I wonder if I can find a precedent that back-dating a check is fraud...
Posted by aspectre (Member # 2222) on :
Did I misread "This check didn't exist until 1/10"? ie What is the actual date written on the check itself?
Posted by Dagonee (Member # 5818) on :
I believe 12/31/2004. If they didn't backdate, then I'd win hands down. If they did, I can still show it was Fedexed on the 10th.
I know the check wasn't printed on 1/7, because he told me, "I haven't had time to print it yet."
Posted by ketchupqueen (Member # 6877) on :
That's exactly what I was thinking of, Bob. I like the wording, though.
Posted by Bob_Scopatz (Member # 1227) on :
Hmm...I suspect that businesses are allowed a little bit of leeway in closing out their month-end books. It's just possible that a check dated in December could legally be cut in January. I'm not 100% sure on that, though. It certainly seems like you could legitimately question it.
But the nice thing is that given that he's already posted the 1099 to the IRS, you could simply send that little letter with a note saying that since you have knowledge of the check not being cut until after January 7th (the last time you discussed it with him) you've been advised not to be a party to defrauding the IRS... Ask him to cut you a new check bearing the proper date and a new 1099 bearing the proper year (2005) by March 15th. If you don't get that, at least you'd have a letter showing that you asked him for it.
Seems like he'd at least be less likely to screw around with the timing of it next year.
Posted by Dagonee (Member # 5818) on :
Oh, I was mostly joking about the fraud thing. But, if he puts in writing that he actually paid this money last year, he'll be lying. And if he does that to the government, he'll be committing a crime. Not that I at all want him to be charged with a crime. But he's playing with some very slippery boundaries here.
He's being careful not to admit in writing when he mailed the check, which to my mind indicates he's concerned with what he can get away with, not with what's actually true. As in, "The check's dated 12/31, so that's when we paid you." What's he not understanding is that civil discovery (if it ever got to that) would uncover the truth in about 2 seconds flat.
I honestly can't tell any more if he thinks he's being honest about this.
Enter...amounts of $10 or more, whether or not designated as interest that are paid or credited to the person's account by savings and loan associations, mutual savings banks not having capital stock represented by shares, building and loan associations, cooperative banks...(etc.)
From the instructions for filling out the 1099-INT on the IRS website.
Posted by ClaudiaTherese (Member # 923) on :
But it was neither credited to his account nor paid out until they actually mailed the check, no? They didn't mail it until the second week of January in the next year, so it couldn't possibly count as having been "credited" or "paid" to his account before then.
The money was still credited to their account at the close of the year, no?
[ February 13, 2005, 06:47 PM: Message edited by: ClaudiaTherese ]
Posted by Boon (Member # 4646) on :
From the same publication:
quote: When is a payment made? Generally, interest is paid when it is credited or set apart for a person without any substantial limitation or restriction as to the time, manner, or condition of payment....
Posted by Dagonee (Member # 5818) on :
It was set apart on January 9. I specifically went to the office to pick it up, and it hadn't been printed yet.
Posted by Boon (Member # 4646) on :
But if they use accrual-based accounting instead of cash-based, they can argue that the transaction occurred on the date it came due, not necessarily the date it was paid.
Posted by Dagonee (Member # 5818) on :
Even though I had "substantial limitation or restriction as to the time, manner, or condition of payment"? Namely, that they wouldn't give me the check?
Bummer. I'm still going to try to get him to do the right thing, though. They purposely withheld payment.
Posted by ClaudiaTherese (Member # 923) on :
So, in that case, how long could they delay mailing the payment, if they wanted to?
*fervently glad I am not an accountant, as I already feel gobsmacked Posted by Dagonee (Member # 5818) on :
There's got to be a limit, but this is actually the kind of judgment I'm comfortable with. Gray, fuzzy, and easily manipulable.
Oh, and thanks, Boon. I appreciate the help, even when it's a less than desirable answer.
Dagonee
Posted by digging_holes (Member # 6237) on :
*tiptoes into thread*
*whispers discreetly* : It's "quandary", not "quandry".
*tiptoes out of thread*
Posted by Dagonee (Member # 5818) on :
Thanks, DH. I always forget to spell check the title field.
So my plan is to guilt them into doing the right thing, even though technically they can get away with this. Not that I'll be pointing them to this thread any time soon.
Divide and conquer time, I think.
Dagonee
[ February 13, 2005, 07:25 PM: Message edited by: Dagonee ]
Posted by TomDavidson (Member # 124) on :
quote: I know someone who itemizes every other year. He also pays his property tax late by a couple of days every other year. That way, he has two property tax payments in one year, and itemizes and then no property tax in the other years, so uses a standard deduction.
I know a few people who do this, too, and I've got to admit that it makes me vaguely uneasy, even though it's perfectly legal. I mean, I work to optimize my returns to some extent, too, but this kind of double-dipping always feels like it's gaming the system.
Posted by Kayla (Member # 2403) on :
Yep. But the rich do it so well. I've never met another group so well versed in how to stay in the technical limits of the law, while simultaneously breaking the spirit of it so well. I suppose that's why they're rich.
That's what is wrong with poor people. They don't know how to break the spirit of the law, without breaking the letter of the law. They should teach that in school.
Though, technically, I suppose what Clinton did for oral sex and cigars, Bush is doing for skirting the law. I mean, have you ever seen anyone so boldly break the spirit of so many laws while paying people to figure out the loopholes to do it legally?
Posted by Dagonee (Member # 5818) on :
Yep, Clinton sure managed to do that with sexual harassment. He got a ruling that even if he did drop trou, grab a subordinate's hand, and put it on his crotch, it didn't rise to the level of outrage needed to support harassment absent a pattern.
It's his one free shot.
As for poor people breaking the law without the spirit, I know a ton of people who regularly underreport income. Why do you think contractors give big discounts if you pay in cash. Of course, they use all the "loopholes" the rich get as an excuse.
Can we stop with the overgeneralizations, or should we keep playing?
Dagonee
[ February 13, 2005, 10:28 PM: Message edited by: Dagonee ]
Posted by Kayla (Member # 2403) on :
We can keep playing if you want.
Clinton didn't bring breaking the spirit of the law while staying within the legal bounds to the forefront of the American people. He brought oral sex, sexual harassment, and cigars to the forefront.
Bush, on the other hand, with the torturing enemy combatants is legal memo, did. Which is what I said. I never said Clinton didn't do that very thing, just that he's not the one that brought it to the forefront of the country's consciousness.
Also, Clinton would be one of those rich people I'm talking about, though, rather than just being rich, he's also a celebrity and not only can break the spirit of the law, he can actually break the law and get away with it. Of course, most presidents can and quite a few have.
I hated Clinton so don't think I'm one of those partisan liberals. I still think Al Gore should have resigned in disgust. It might have gained him enough votes from the morally outraged to swing the election. Or talked Clinton into resigning Jan. 22, 1999. That way, Gore would have had a day less than two years as president under his belt (important so he could still be elected for two terms,) the country would have been comfortable with him as president and could/would have re-elected him for another 8 years. And Bush would have been forgotten completely.
Your ball.
Posted by Dagonee (Member # 5818) on :
Actually, I was making a comment on your utterly unnecessary, unprovoked, unsupported, and non-topical dig at Bush. But whatever.
Posted by Dagonee (Member # 5818) on :
Problem resolved, more through psychology than through persuasion. This morning I called the CEO of the company (an outsider brought in by my partner a year before I left). He hates it when I go over his head. Posted by Kayla (Member # 2403) on :
Ahh. So, the unprovoked attack on Clinton was cool with you?
Posted by Dagonee (Member # 5818) on :
You brought up Clinton, not me, and you mischaracterized what the actual issues were when you did:
quote:Though, technically, I suppose what Clinton did for oral sex and cigars, Bush is doing for skirting the law.
How was my response unprovoked?
[ February 14, 2005, 03:46 PM: Message edited by: Dagonee ]
Posted by Dagonee (Member # 5818) on :
quote:That's not nice! [Mad]
[ROFL]
And that's exactly why my boss will never hire someone over his head, even though he's woefully inexperienced as a manager.
Adam, I thought you were happy about this job?
They could have stalled on this. Even if Boon's interpretation wasn't correct (and I wouldn't bet against her on this), the proof problem was insrumountable short of a proceeding whose cost would outweigh any possible benefit.
So I had to do something, and that something was make them realize that calling the accountant and having them fix it was way cheaper than taking calls from me about this for a week.
Dagonee
Posted by Kayla (Member # 2403) on :
quote: Actually, I was making a comment on your utterly unnecessary, unprovoked, unsupported, and non-topical dig at Bush.
quote: You brought up Clinton, not me,
I made a dig at Clinton before the dig at Bush. You didn't seem to have a problem with the Clinton did, and I'm wondering why. Is it a partisan thing?
Posted by Dagonee (Member # 5818) on :
Yes, it was a partisan thing. By you. The context of your post makes this clear. Your "dig" at Clinton was a) inaccurate, minimizing and recharacterizing what he did, and b) there to make Bush look worse in comparison.
Dagonee
[ February 14, 2005, 04:06 PM: Message edited by: Dagonee ]
Posted by Kwea (Member # 2199) on :
It is a logical fallacy, yet again....
comparing the two, even though the situations are not the same, and then trying to draw parallels between them.
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sorry sorry sorry )
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