Freelance Camp

Proposal makes businesses tax collectors

// February 25th, 2010 // Comments // Uncategorized

Call to Action: Proposal makes businesses tax collectors and forces small biz to make interest-free loans to state.

California continues to have a severe budget crisis – $20 billion in the hole. Unfortunately, one of the solutions being proposed in Sacramento is yet another budget gimmick – an onerous 3% independent contractor withholding mandate on businesses and public agencies.

Any business/agency hiring an independent contractor (anyone who receives a 1099-MISC) will have to reduce every payment by 3%, and is responsible for remitting that money to the Franchise Tax Board, the state tax collection agency.

· Almost all companies, agencies and non-profits of any kind will have to withhold.

· Almost anyone who receives a 1099-MISC will be withheld upon, including builders, plumbers, real estate agents, attorneys and health care providers.

Under This Proposal:

· The 3% will be withheld even if the business owes no income taxes for the year due to losses/slim profit margins.

· The state gets to use the money-interest free until tax return time the next year.

· Money is taken out of the pockets of businesses that is needed to keep business afloat, make payroll and pay bills.

· Implementation will be extremely costly and complex for businesses and state and local government agencies.

· The mandate is ongoing and permanent for businesses/agencies.

All for a one-time money grab that is merely an acceleration/borrowing that generates very few new revenues for the state!

Call to Action

1. Add your business’s name to the growing coalition against this proposal! To be added, simply e-mail laurie.lively@calchamber.com. Your business’s name will be added to the coalition fact sheet.