The unintended consequences of tax changes are often very
Posted By: nasty. on 2009-05-05
In Reply to: Complex issue - don't jump for - joy just yet.
One of the ways around this that was mentioned is that many companies will simply form completely separate entities offshore and then sell off their US companies to the offshore companies - meaning, they might simply discontinue being US companies at all.
A second thing to consider is this: Why were the tax breaks created in the first place? There must have been some benefit that was anticipated, right?
Yup. The tax breaks were seen as allowing US companies to do business at a lower cost so they could compete in the global market with foreign companies that enjoy lower labor costs. It isn't too hard to figure out the benefits that should flow to our country when our companies can compete better.
With things like this we have to step back, look at the big picture and try to consider all of the different angles rather than jumping at the sound bites that come from the politicians, most of which only provide a very superficial view of the issue. It's also important not to be seduced by one aspect of a proposed bill that we think will benefit us personally in the short run, because a lot of times what seems to help us in the short run doesn't turn out to help us nearly as mnuch as we had hoped, and then turns around to bite us in some other way. There is always the other side of the coin to virtually every piece of legislation - tax or otherwise - and there are always unintended consequences that surprise everyone.
Complete Discussion Below:  marks the location of current message within thread
The messages you are viewing
are archived/old.
To view latest messages and participate in discussions, select
the boards given in left menu
Other related messages found in our database
If you file the SS-8, there are consequences on both ends - sm
You will be asked to refile your taxes for the period in question. This could help you or hurt you depending on your situation. Things you were able to deduct fully may not be fully deductable as an employee or rather than a tax credit, they are now tax deductions which can at times help you or hurt you.
I had a determination for a five year period and it was a wash. There were also no penalties on my end. The company on the other hand, did incur huge penalties and interest. In the end, the only one who really gained was the IRS. The company i worked with is now defunct.
There is no big windfall to the IC so if you hear of anyone who tells you they received a huge chunk of change by filing the SS-8, I'd think long and hard about believing it. It may be possible, again given their tax situation, but highly doubtful.
Listen, you know if you are being treated like an employee or an IC. You have a choice - continue your working relationship if you are generally happy, or move on and find a better fit. This has been going on for decades - control by the MTSOs and compliance by the supposed ICs, but I dont see anything changing anytime soon.
Be careful before you go tilting at windmills :)
|
