1099

[Horace Greeley]

At 07:25 PM 1/17/2006, you wrote:
>Presumably, in the manufacture of a set of keys, the main cost is labor,
>therefore a 1099 should be issued--which is what I always thought.

Yes.

>  However,
>if the set of keys is sold as a manufactured product, then sales tax should
>be charged unless it is manufactured out of state in which case there is no
>applicable sales tax, or if it is resold and I have a resale license in
>which case I should have charged sales tax.

Yes and no.  The laws covering these kinds of interstate transactions 
have been changing in response to US Supreme Court reinterpretations 
of the commerce clause of the Constitution.  While most of the 
changes to date have had to do with Internet purchasing, some of them 
might be more specifically applied to other kinds of purchases.

>  This does, seemingly, have a
>parallel in the case where, for example, you have a soundboard made and
>installed in a piano.  Are you paying now for a manufactured product or are
>you subcontracting the service which makes and installs the soundboard.
>I've always treated the contracted making and installation of a soundboard
>as a labor item subject to 1099 forms (except where the company is a
>corporation).  This seems like it would be the same thing for a set of keys.

Which is precisely why I tend to overcompensate.  One auditor will 
tell you one thing and another will tell you another - sometimes in 
direct contradiction of one another.

>Gee, isn't this fun.

Hmmm...all depends on your definition of "fun".  Personally, I'd 
rather be in Philadelphia.

Horace



>David Love
>davidlovepianos@comcast.net
>
>-----Original Message-----
>From: pianotech-bounces@ptg.org [mailto:pianotech-bounces@ptg.org] On Behalf
>Of Horace Greeley
>Sent: Tuesday, January 17, 2006 7:13 PM
>To: Pianotech List
>Subject: RE: 1099
>
>At 06:59 PM 1/17/2006, you wrote:
> >Please elaborate.  What kind of invoicing would make it one way versus
> >another?
>
>How much is labor and how much is material?  Under existing tax
>codes, someone, someplace, has to account for that.  The expectation,
>unless you have a reseller's permit or license, is that you pay tax
>"at source" on whatever parts and materials you use when you purchase
>them.  That portion is, ostensibly, already taxed.  The labor portion
>is assumed to be untaxed, and, therefore "should" be reported.
>
>My experience is that I did not like being the one who had to make
>the determination between the two and/or be responsible for someone
>else's failure to report the income received from me.  On one
>occasion, in doing a favor for a manufacturer (often a mistake, but
>that's another story), I acted as a contractor contracting the
>services of several other technicians for a fairly large and
>extensive amount of work.  As things worked out, because I failed to
>submit 1099s, and because several of those folks chose not to report
>as income the money I paid them, my taxable income (and, therefore,
>my tax liability) was significantly higher than it would otherwise
>have been.  It took several years and an audit with penalties to get
>it all worked out.  Therefore, I choose to provide 1099s perhaps more
>often and covering more stuff than I technically need to do.  YMMV.
>
>Best.
>
>Horace
>
>
>
>
> >David Love
> >davidlovepianos@comcast.net
> >
> >-----Original Message-----
> >From: pianotech-bounces@ptg.org [mailto:pianotech-bounces@ptg.org] On
>Behalf
> >Of Horace Greeley
> >Sent: Tuesday, January 17, 2006 6:44 PM
> >To: Pianotech List
> >Subject: RE: 1099
> >
> >At 05:50 PM 1/17/2006, you wrote:
> > >What about if you have a set of keys made?
> >
> >That depends on how things are invoiced.
> >
> >Also, different accountants interpret these code sections
> >differently.  The more conservative one is with this, the less likely
> >one is to have an audit.
> >
> >Horace
> >
> >
> > >David Love
> > >davidlovepianos@comcast.net
> > >
> > >-----Original Message-----
> > >From: pianotech-bounces@ptg.org [mailto:pianotech-bounces@ptg.org] On
> >Behalf
> > >Of Dean May
> > >Sent: Tuesday, January 17, 2006 5:30 PM
> > >To: 'Pianotech List'
> > >Subject: RE: 1099
> > >
> > >I'm pretty sure it is for money spent on service (labor).
> > >Goods/materials are exempt. If you are a reseller you don't issue 1099's
> > >to your suppliers of goods.
> > >
> > >Dean
> > >Dean May             cell 812.239.3359
> > >PianoRebuilders.com   812.235.5272
> > >Terre Haute IN  47802
> > >
> > >
> > >-----Original Message-----
> > >From: pianotech-bounces@ptg.org [mailto:pianotech-bounces@ptg.org] On
> > >Behalf Of David Love
> > >Sent: Tuesday, January 17, 2006 8:10 PM
> > >To: 'An open list for piano technicians'
> > >Subject: 1099
> > >
> > >What's the rule on who gets 1099s and who doesn't, anybody know?  I know
> > >that contract labor over $600. does, and I know that businesses that are
> > >incorporated do not.  What about manufacturers?
> > >
> > >David Love
> > >davidlovepianos@comcast.net
> > >
> > >
> > >
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