Friday, March 20, 2009

A Message from MSPA

Today I am only calling your attention to a legislative matter. The MSPA has the following on their site:

Dear Mystery Shopper:

MSPA has some very important, and quite serious, information for you.

There are some very serious legislative threats that could deny you the right to work as an independent contractor and threaten the mystery shopping industry.

We urge you to contact your Senators and Members of Congress and implore them to oppose legislation that would undermine the legal recognition of independent-contractor status.

We ask that you contact your Senators and your Congressional Representatives in three ways:
  1. Call their Washington or home district offices
  2. Send them an email or submit a web-form message to them
  3. Write and mail a letter to them (and copy us at the address on the bottom of this message or send a copy by fax or email)
The following are suggested points you should make in your communications:
  • I am an independent contractor (I do mystery shopping on contract with companies) and I strongly urge you to oppose any proposals that would threaten my right to work as an independent contractor
  • New laws that increase the risks to companies that do business with independent contractors put legitimate self-employed service providers – like me – out of business, because our clients will be afraid to do business with us.
  • Many companies that are clients of Independent Contractors qualify for Section 530 protection and need the certainty that Section 530 provides in order to continue doing business with independent contractors – like me.
  • IRS data indicate that the federal tax compliance rate for independent contractors whose earnings are reported on Forms 1099 is 97%, which is only 2 percentage points lower than the 99% compliance rate for employees--that is, we are, as a group, tax-paying, law-abiding citizens.
  • Now is an especially inappropriate time for the government to take any action that will depress economic activity, especially in the entrepreneurial sector.
For your further information, at this point, we are not aware of any specific anti-independent-contractor bills that have been introduced in the U.S. Congress. Nonetheless, we believe that bills that would make it more difficult to establish independent-contractor relationships are currently being drafted. Our request is that you join us in our effort to urge elected representatives to oppose any such bills.

That having been said, one of the major areas of concern is the prospect of making changes to Section 530 of the Revenue Act of 1978. As written, Section 530 provides parties to covered business relationships with absolute certainty that the independent-contractor status of their relationship will be respected for federal employment tax purposes. Prior efforts that we believe will be resurrected would remove that protected certainty. The protection afforded both to shoppers and to mystery shopping companies would be eliminated under provisions of earlier attempts to change the law and we believe the same efforts will be made this year.

We believe the preservation of independent-contractor status is critical to the mystery shopping industry. If new Federal legislation were enacted that significantly increases the legal risks associated with doing business with independent contractors, it is impossible to predict with absolute accuracy how that would affect the mystery shopping industry. We believe, however, that the effect, on balance, would be extremely negative. If a new law were to result in companies hiring mystery shoppers as employees, the cost to clients would necessarily increase, and that cost increase could lead to a singificant reduction in the amount of mystery shopping opportunities available.

Thank you for your support in this very important effort.

Friday, March 6, 2009

Don't wait until April 15th!

Ah, tax time. The joy, the challenge, the excitement. Yeah. Okay. Look, I'm no professional tax preparer, and don't give advice on how to fill out forms. But, if you have no clue how to go about this, here are some suggestions:

Of course, your records are all in order, easy to get to, and make sense, so this won't take long. You have your list of assignments with all the information about what you have been paid, including bonuses and reimbursements. You have your mileage sheet all together and calculated, so you know how many miles you drove for business purposes. All your office supply purchases are listed, your receipts are kept and filed and you have a total for them.

You'll need a Schedule C, a Schedule SE (probably the long form, although your tax advisor can help you) and the regular tax form. Because you've had self-employment earnings, that means it's the 1040 for you.

If you have earned $600 or more from a single company, they will have sent you a 1099 Report of Earnings form. Don't be fooled into thinking you don't have to report any money you make that is less than that $600 figure. The IRS expects all income to be declared.

Now it's just a matter of reading through the forms and filling in the blanks. Pay attention to mileage, the standard deduction changed from 50.5 cents per mile to 58.5 cents per mile on July 1.

Consensus is split as to the "activity code" to use for mystery shopping. Many shoppers use 999999, Unable to Classify. 561600, Investigation and Security Services is a common code for shoppers in states that require a private investigator's license. I personally like 541910, Market Research & Public Opinion Polling. Again, check with your tax preparer or accountant.

Good luck, file early, and get help. The first time seems harder than it really is.