It has always been there. You perform some work for me and I will pay you in cash. That way I don’t have to file taxes, you don’t have to pay taxes and we can go on our merry way. Many construction day laborers, housekeepers, landscapers, movers, waiters, bartenders, painters, fixer uppers and dishwashers get paid that way. It will probably always be there in some form or another whether direct pay or barter. In today’s construction industry there is a tension building around the cash economy where contractors are being forced to low bid work in order to keep their teams together and to do so means in some cases that they have to go to subs who in turn go to labor brokers who then go to the street for day laborers in order to meet the demand for workers on the jobsite. When they make that move they are directly contributing to the cash economy may be creating safety problems on many jobsites in a time where safety and the quality of construction is a critical issue for the industry. The results of this approach, one that is becoming more prevalent during tough economic times, is that taxes are not getting paid, no medical benefits are being paid, social services are being overburdened, no retirement is being set aside,
February 07, 2010
The deadline for issuing 1099s to contractors and consultants who worked with you last year was the 31st of January. There was a last minute flurry of people trying to get w-9s filled out so that they could meet the deadline. But in the Construction industry this deadline means something different. With the shift in the economy over the last two years, the use of contract and “street workers” has changed the entire industry and many sub contractors are left holding a handful of incorrect 1099s (http://www.wisegeek.com/what-is-a-1099-form.htm) for non existent workers or for workers who have “taken the money and run” to another jobsite or back to their families in Mexico or Latin America. Contractors and sub contractors who have been using contract workers for the last year are faced with a dilemma. They have issued the 1099s, but they cannot find the folks who are supposed to get them in the mail because of two things. First, they were given a false or non-existent social security number when they hired the contract workers to work for the company. And they did not use the E Verify system to validate those numbers. The Immigration Reform and Control Act of 1986 (http://en.wikipedia.org/wiki/Immigration_Reform_and_Control_Act_of_1986) made the social security card the ID card of choice for the workforce.
February 07, 2010