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Tn Dept of Revenue and Harassment

2012-02-05 21:23:01.578064+00 by meuon 3 comments

Tennessee really wants to be a high-tech state, really. They keep saying it. Chattanooga wants to be The Gig City. But there is a big problem. The Tennessee Department of Revenue. In Tennessee, there is no "income tax", but there is a tax on taxable interest and divident income. "..exceeded $1,250 ($2,500 if married filing jointly)".

The problem is a lot of technology workers are "1099 Employees", either for their full time job, or for hobbyish and moonlighting work.

Still no problem, right? Wrong!. The TDR seems to be getting information from the Department of the Treasury, aka the Internal Revenue Service about your 1099 income levels. Then they tax you, with fines and interest, for that 1099 Income. It does not matter to them that it is not 1099-Div income. It does not matter that you hand deliver and send via registered mail the documentation that shows it was not 1099-Div income. They ignore that, fine you some more for not responding, and then threaten to levy your assets.

I am not alone, I've heard this from other people over the years, and now it is my turn. I have nothing to lose by being loud about it.

I've had issues with the TDR before. Last time (2000) they wanted $500k+ from HTS, Inc. After an insane audit and $20k+ in lawyer fees. They lost.


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comments in ascending chronological order (reverse):

#Comment Re: made: 2012-02-05 23:15:41.209005+00 by: ebradway

Sometimes it's easier just to have a regular tax. My Colorado State Income tax has separate lines for my 1099 and 1099-DIV income.

And it is surprising when you encounter aspects of our legal system where "Guilty until proven innocent" takes a back seat to "We're going put the screws to you just short of criminal charges". And then the legal costs to loosen the screws starts to climb well into five figures.

#Comment Re: made: 2012-02-06 13:06:29.986591+00 by: andylyke

I'm a church treasurer, and we're getting all kinds of grief because we didn't pay the guy who cleans once a week under a W2. What impediment is there to your getting paid as a W2 employe? It seems that might be a way out.

#Comment Re: made: 2012-02-06 19:14:12.676058+00 by: meuon

I am paid now as a W2 employee.. all is good in the current world. But I did one side project a couple of years ago that paid me about $25k, plus a few smaller ones. All filed with the IRS as 1099-Misc, and taxes paid properly. Tennessee has decided, despite my 1040, and 1099-Misc's showing them as 1099-Misc To run me through the wringer. The form with penalties and such they sent shows them all as 1099-Div. Which while I had some, were less than the filing requirement. Nothing ambiguous or wrong about it, We pay good money for my taxes to be done properly.

Side note: UtiliFlex leases our bodies and minds from LBMC with good bene's, accounting, and what is effectively an outsourced grade A "human resources" department, yeah, we pay them a few pennies for the services, all have been worth it.