Are you reporting the none sales taxed interstate Internet purchases to the commonwealth of Kentucky so that you can submit the sales tax to them?
You might get away with it not recording and you might not. We were taught in school that most tax evaders are caught by someone turning them in. Keep your friends close and your enemies closer.
Your accountant can walk you thru that.
Ours checks them out, many times by talking to their accountants directly and either prepares a 1099 for them or not, depending on what they find.
We used to handle our own taxes decades ago, but eventually the laws became so complicated, we feel better letting accountants handle them.
Accountants keep going to continuing education and certification seminars to keep their certifications and stay up on all the new rules.
It would be very hard for anyone managing a business to do that job also.
I don't use an accountant as we are not a business but a hobby farm. Therein lies the distinction. According to my friend the CPA, since we are not a business we do not have to file the 1099's.
And some speaker on TED made the point that the problem with the uber-rich is that there are only so many Slim Jims (or bespoke suits or yachts) one person can buy.
So uber-rich guy buys all he wants, stops, and then puts his money into other stuff. If all goes well, he's a great venture capitalist. If all goes badly, he benefits from a tax code full of holes that favor his type of spending.
I have been talking about everyone else who cheats on taxes, and it is a HUGE number. They wouldn't be able to avoid a national sales tax unless they have the means to buy outside the country. There should, of course, be exemptions for necessaries (clothing, food, medicine.)
It has nothing to do with the "uber-rich" as you call them. The biggest tax loophole of all (in terms of dollars) is the mortgage interest deduction. Talk about regressive. Why should the renter have to pay all of his income tax and the homeowner gets a huge deduction?
Actually, the best idea of all is a Value Added Tax which is a consumption tax on the supply chain and not directly on the end user. Europe and Scandinavia--all those progressive countries have them.
Do e-bay sellers pay taxes? I haven't when I buy from them.
So here's my problem with a VAT. Let's say the federal government decides to institute a VAT in place of our current tax system (a reform that has been bandied about). So the rate gets set at, say 17%. Maybe it would be lower, but I've seen that % as an example in some of the articles I've read (sorry not to have sources to cite, but this is just from miscellaneous readings I've done over the past several years as part of my job). So all goes well for a few years, until the government remembers that there's a constitutional amendment empowing them to insitute an income tax. So we end up with a national sales tax plus an income tax...
Now, for that matter, does the federal government actually have the power to enact a national sales tax, or would that require a constitutional amendment? Wondering if that might be a power left to the states.
A couple of things about reporting. If you pay a contractor over $600 in a year, you must provide a 1099. When Obama took office he passed a law that required us to file 1099's for *everything* even the retail feed store or tack store purchases. It was incomprehensible and a nightmare fore everyone in the courty. Of course Obama signed it. Many objected and it was repealed and a national disaster was averted.
So, you do have to do 1099's as you always did but not to your retail providers like the local feed store.
If you barter, that is a taxable event and you must report the value of the barter received as income. If I were to trade hay for a horse, I would be legally required to report the value of the horse as income.
Many, many people do not report their income. I do. I have been audited a few times and I find it a lot simpler to just aggressively file tax returns, but very by-the-book legal ones.
Here in Miami, a lot of businesses (like lawn care services, tile people, etc.) will ask you to pay in cash or write the check to a person rather than the business, all in order to keep it under the table and not pay taxes. Not something I'm willing to do, but sadly many others are.
The problem with a VAT is that it does not preclude the existence of an income tax as well. The countries of the European Union have both income tax and VAT. The typical VAT in the EU is around 20%. Yes, this does hit the end consumer because it is passed along in the price of goods.
I think we are in a financial hole because we are using more than we have.
Politicians are human and will use all they have, if it makes sense or not, the government doesn't buy bonds or stocks or saves money, they are all about spending what they get and asking for more.
If any business was run like the government runs thru money, we would not have any business left that didn't go bankrupt.
That mindset of those holding the government purse strings when taxing and allocating that money is what HAS to change, if we ever are going to get back on track.
Yes, Bluey. Their behavior is like the people who kept taking money out of their houses in the mid 2000s. They think that the economy is just going to continue to grow and that they will be able to pay off their debt. As we saw in 2008 when the housing crisis hit, it is wishful thinking. Ask Greece or Spain how this mindset is working out for them.
The only way to change that mindset is to change the people who are in government. Unfortunately that won't happen because nobody wants cuts that may effect them, so they vote in the people who will promise them not to cut.