I would like to share with you a little experience I just had last night. I received a notice from the IRS that I had filed my 1120 but they had not received payment, and now they wanted payment plus penalties and interest. Now I had paid my 1120 payment via EFTPS, because you can’t just send a check with your 1120 form this year, you must pay electronically. So like a good taxpayer of a corporation, I filed my 1120 with the Department of the Treasury and paid via EFTPS.
The notice had an 800 number on it to call if I felt some mistake had been made, so I called it. After sitting on hold for 20 minutes, I talked with an agent who told me I had not paid. Um, yes I did… I see it on my bank statement in front of me. He said he did see my tax withholding payments from my payroll, but not the payment for the 1120. Ok, I said, I’ll call EFTPS and see what happened to the payment.
I called EFTPS’s 800 number and was on hold for about 5 minutes. Then I got an operator who told me I had paid and to disregard the notice. I told her I didn’t think that was too wise since the Department of the Treasury thinks I haven’t paid. So we both called the Department of the Treasury again and after 10 minutes the EFTPS lady said that she needed to go but gave me all the information I should need to talk with the IRS about my tax payment.
After 25 more minutes of sitting on hold I finally got through to an IRS agent again. I went through the verifications and the description of my problem to where she promptly said: there it is. She found my payment after doing some sort of update to the computer system. She said the other agent probably did not do this.
So this is our tax dollars at work. 1 hour and 25 minutes of my time and countless resources on the other end to discover that I had actually made my payment. Believe me though, this is much better than my experience with state government. I had a situation once with my state sales tax…
Many of you are wondering why the federal government does things to hurt small business when small business creates a ton of jobs in this country. My bigger question right now is why Illinois wants us to move? Ok, you might think this is a bit out there, but Illinois has done some major things to impact Illinois businesses recently.
1. Illinois significantly raised corporate income taxes and personal taxes.
We went from 3 to 5% income tax and 4.8 to 7% corporate taxes. We also have a 2.5% corporate surcharge and a yearly fee for filing the coporate report (i.e. franchise fee). How can business sustain such a hike? I know that there are several states where corporate taxes and personal taxes are not so high. It looks like Wyoming might be the place to go, or Ireland.
My state is starting to become the place to be from, sort of like Iowa was in the 1980’s or Michigan today. Do you really want to lose small business Mr. Quinn?
2. Illinois now requires sales tax to be paid by Amazon.com and other web retailers that use affiliates in the state
The impact to affiliates that live in Illinois was major in some cases. We lost the ability to use Amazon.com as an affiliate program which doesn’t impact us in a major way, but it does impact some businesses in a major way. Enough so that they may relocate to other states, such as FatWallet.com. We have referenced many Amazon.com books on our site here and we will have to go through and remove the references. I am not sure if we will go to another affiliate program for books or if we will just give up on offering books through this site.
3. Caterpillar and other larger businesses are threatening to leave
Caterpillar is now threatening to leave Illinois along with 23,000 jobs. With the hostile business environment here, we may see several others leave. The larger companies are just the tip of the iceburg, as smaller companies may do the same thing just to stay afloat. We won’t hear about them, they won’t make headlines. They will just pick up and go elsewhere, and many other states will welcome them with open arms.
Governor Quinn, we need to make Illinois favorable for companies to move to, not so hostile that great companies will move away. You think you have revenue problems now?
I am a small business person now. I have my own consulting practice and two clients. I live comfortably and make enough money, although I could always use more. I make nowhere near $200,000 per year in realized income. If I did, I really wouldn’t mind sharing more of my income with the federal government, as long as they were using it wisely.
Realizing or showing a $200,000 personal income usually means you’re spending too much. Your fixed expenses are high. Maybe you’re living in a million dollar home with a big mortgage. Maybe you have an expensive car you’re paying for. Something is causing you to spend a lot of money. Because I know that if you don’t need to realize a high income you won’t. You can put as much as $42,000 year year in a 401k. You can hold money in your business if it is a corporation (and pay corporate taxes on it), unless you have a subchapter S corp. Even still, you have so many business expense choices to keep you from realizing an income as high as $200,000.
The real killer to the small business person is administration time, the stuff we don’t know, and the stuff that could change. If you want to do me a favor, get rid of the complexity so that I don’t have to spend so much time working on my business administration and trying to figure out what the tax laws really say. Do I really need to put an attorney on retainer or use a tax accountant? I cannot possibly afford either’s fees, so I have to do it myself. And that takes time away from billing my client and making more money for my business. This brings down my income much more than a tax increase would.
So to the politicians who say that the small business guy making $200,000 can’t afford a tax increase, you’re probably right. But it’s his own fault that he can’t afford it. Otherwise he wouldn’t be realizing that much income. The vast majority of small business people, though, make nowhere near this. Some are by choice but most are because they are struggling to get by.
If you really want to help the small business person, the ones who provide most jobs to the economy, make it easier for us to do business.