I received an email this morning from my good buddy, Ron Mueller over at Home Business Tax Savings. I’ve had the privilege of having Ron as a guest speaker for several calls over the last few years for my readers and he always has good advice. I received this email this morning from Ron and I know he will not mind my sharing with my readers; as we need to get the word out.
“Start of email…
Because of the urgency of this post I’m pasting his email exactly as I received it. Please tweet, retweet, share; whatever you have to do to get the news out.
Rarely do I send an “Urgent Alert,” so when I do it means something.
You should be worried if you…
(a) live in California AND/OR if you
(b) are an Independent Contractor AND/OR
(c) if you know that “Whatever happens in the ‘land of fruits ‘n nuts’ (that would be CA) gets copied everywhere else”…
YOU SHOULD BE WORRIED!!!
The California Assembly passed SB 17 on a majority vote which contains a provision for a 3% withholding tax on Independent Contractors.
If this bill becomes law, all of USA who contract with IC’s will be required to withhold 3% of the monthly check of every IC and remit this amount to the state, just like a payroll withholding tax. Throughout history, across the country, Independent Contractors have been exempt from withholding taxes because many of their expenses are deductible. This legislation sets a dangerous precedent that other states, and even the Federal Government,
If you share my concern — even if you are not a CA resident — please voice your opposition to this bill ASAP by contacting the CA Governor and CA Senate President Pro tem Darrell Steinberg and let them know how you feel.
A sample letter appears below for your convenience, but your communication will be most effective if you use your own words.
Contact info for the CA Governor and Senate President appears below.
Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814
The following is Senate President Pro tem Darrell Steinberg’s contact information:
Senate President Pro tem Darrell Steinberg
State Capitol, Room 205
Sacramento, CA 95814
Dear [ ]:
Unfortunately, once again, the California Legislature is considering an Independent Contractor withholding proposal, which would place a HUGE burden on my family business.
[Tell your personal story in your own words]
I have been an Independent Contractor for more than [Insert the number] years. Originally, I became an IC because [fill in reason]. Now my family depends on this extra income to cover our cost of living in California.
I am not opposed to paying my share of taxes, but it makes no sense to me to send the State my money, and then have the State send it back a year later to me when I file my tax returns.
I need every dollar I make to run my business. I have to pay my business expenses from the income I earn. While I, of course, support the need to pay taxes, withholding up-front on taxes I may never really owe, will cause severe, and unnecessary, cash flow problems for my small home-based business.
Making a living at my business is already difficult enough. If you burden us with more administration and paper work, it only serves to make the business more difficult and less attractive, and therefore it will be more difficult for me to make a profitable (taxable!) income.
In the end, the State will not end up with any more money, but less. How will the State benefit by forcing legitimate mom-and-pop businesses out of business in the name of “tax reform?”
Please do not support any budget resolution that contains Independent Contractor withholding. It would hurt my family and my business as well as tens of thousands of others in my occupation.
“End of email”
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