Just had a visit from the taxman!

[Oz Nimbus]

Hope you guys don't mind if I vent a bit here....

Some hero called up the provincial tax office and issued a complaint against my studio. Here's how it works: In the province of Ontario, you need a "vendor's permit" to sell items. This includes T-Shirts, Cd's & merch. However, you don't need one to sell studio time.
So, I got a message on my machine this morning from the Ministry of Finance. I called the dude back, but next thing I know, he's knocking on my door.
"Do you have a vendor's permit? For all the Cd's & shirts you sell." he asked.
"What are you talking about?" I replied.. "I only sell my time." I did my homework when I got my business licence.

Upon inspection of the complaint form, it seems the complaintant said I sell all kinds of merchandise, and advertise it on my website. Well, if you've ever been on my website, you'll know that's just not true. Hell, I don't even advertise my hourly rate.
It also said I undercut other studios as I don't charge tax.... well, we have two kinds: Provincial & Federal. I don't make enough to charge Federal, & you can't charge Provincial on a recording service.

That being said, I'm rather pissed at the moment. I live in a Working class town, and there are several things you don't do where I come from.
#1: Rat out your competition. I mean, really, what kind of low life scumbag does this sort of ****?
I have my business & I don't mess with other studios. Here I am, mixing away, & next thing I know I've got the taxman at my door. Grrrrrrr.

What was kinda funny was that the guy said he usually gets calls from divorced wives looking to mess with thier ex-husbands. It was his first visit to a recording studio. Obviously, someone doesn't like me... evidently someone without enough balls to have a face-to-face discussion.

I need another cigarette.

-0z-

[johndale]

I feel for you Oz. Just remember there is a little thing called "karma". You will find out who did it when you hear of some studio having a weird fire or a client is into them heavy and relocates to Mexico, without paying up.
John

[Mark Stebbeds]

I need another cigarette.


Try cigars. You still get your nic fix, but less harmful to your lungs.:)

Besides, in Canada you can get Cubans without having to pay through the nose for smuggled contraband.:)

FWIW, several years ago I lived in an apartment where I used about half the space for a home studio. I got flagged for an audit (as did many other self employed music/studio folks that year), and a rookie IRS agent was assigned to my case, and came to my apartment to investigate the "use of home as office" deduction. My accountant attended the meeting, with video camera in hand, which we eventually showed to his superior. We cut a deal that worked out well for me.

Mark

[Sam C]

I'm glad it worked out, irritating as it was!!

As a small business owner I had an audit a few years ago that was ugly. They pick mostly on T&E, car, and advertising expenses in these situations. In my case it went from a defined audit to a broad audit. All in all it ended up being fine. But the stress level from the letters (which had huge numbers as potential ineligible deductions and then interest!!) and federal legal mumbo jumbo got intense. The face to face stuff was fairly amiable! Hope that is the last time!

[Oz Nimbus]

The govenment dude was actually quite friendly... which was nice. It just bothers me that someone would file a complaint, however.

-0z-

[Mark Stebbeds]

But the stress level from the letters (which had huge numbers as potential ineligible deductions and then interest!!) and federal legal mumbo jumbo got intense. The face to face stuff was fairly amiable! Hope that is the last time!

Same thing happened to me, with huge numbers for taxes due after deductions were disallowed. Did you get the offers to discuss "settlement" before proceeding with the audit? I found those to be almost like extortion, but the audit guy explained he was required to make the offer.

With the help of my tax guy, it worked out fine for me as well, and set a precedent for future deductions.

Mark

[Dave Labrecque]

The govenment dude was actually quite friendly... which was nice. It just bothers me that someone would file a complaint, however.

-0z-

While we're on the topic (of ratting on your competition)...

For years I've paid for proper use of library music in my radio and TV spot production. But local radio stations (I'm sure this is not unique to Tucson) use commercial recordings all the time as beds for commercials that they produce for station clients. I'm pretty certain their montly music license fees cover on-air playlist-style programming of music and NOT commercial use of the music.

For years I've thought to myself "I ought to call ASCAP and blow the whistle on these jerks" since their illegal practice works against me, giving them an unfair advantage when it comes to pleasing certain clients who want that music on their spots. In my case I tell clients, "No, you can't use that music. In fact, you have to pay me to use music you haven't heard before." Well, some of those clients find the radio stations' offerings much more inviting. (That's the theory, anyway. Truth be told, those types of clients are usually small-time mom-and-pop shops who end up being a PITA, anyway.)

I assume this practice (of using music inappropriately in commercial production) is fairly widespread. I wonder if ASCAP would even want to invest the manpower in chasing the stations down on this. Hell, I'd even provide specific spot/station/date violation info for them. But this has gone on for years, so perhaps they just turn a blind eye?

[Naturally Digital]

The govenment dude was actually quite friendly... which was nice. It just bothers me that someone would file a complaint, however.What a pain!! :mad: So, are you telling me that the culprit gets the benefit of anonymity too?

Don't give it a second thought Glenn. I'm just glad to hear you had your ducks in a row. I'm glad you vented... Serves as a good reminder for all of us.

If you ever do find out who it was please PM me... I want to make sure I never have any dealings with them.

OK. Back to mixing!

[Dave Labrecque]

...and set a precedent for future deductions.

E.g, you no longer deduct stuff that's not deductible? :p

[bcorkery]

I get dinged every year just when I feel like I'm getting ahead! I pay my quartly taxes and then in mid April, My bank account melts away like the wicked witch of the west! That's the OZ connection :D.

Through it all, I try to maintain my cent$ of humor :).

Yea, back to mixing.

[Carey Langille]

Sorry to hear about that OZ, Its a bad scene... I know of some studio using completely pirated software that got busted, but they deserved it..Thats not fair that you have to go through what you did... will they take any further action or is it over? Did they Or could they disclose the complainant? Is that your right to know?

[Mark Stebbeds]

E.g, you no longer deduct stuff that's not deductible? :p

I meant that the deductions the IRS were questioning passed the audit, so they are no longer questionable, or can be remedied with a letter (and some have been).

Mark

[Sam C]

Same thing happened to me, with huge numbers for taxes due after deductions were disallowed. Did you get the offers to discuss "settlement" before proceeding with the audit? I found those to be almost like extortion, but the audit guy explained he was required to make the offer.


Yes, but first they asked me to pay their amount. I wasn't sure whether to laugh or cry!!;) Then they asked if I would like to negotiate a number. I ended up paying nothing! My deductions raise their flag but, I was well documented and very organized for the main meeting.

[Microstudio]

OZ....The first thing you need to do is STOP SMOKING!

Ok...that being said....its time to wright a song about it and make a million, not about the tax man, about the scum bag......Name the song "scum bag warfar"....:cool:

[Dave Labrecque]

I meant that the deductions the IRS were questioning passed the audit, so they are no longer questionable, or can be remedied with a letter (and some have been).

Mark

Ah... that's much nicer. :)

[Mark Stebbeds]

Yes, but first they asked me to pay their amount. I wasn't sure whether to laugh or cry!!;) Then they asked if I would like to negotiate a number. I ended up paying nothing! My deductions raise their flag but, I was well documented and very organized for the main meeting.

Same thing here. I ending paying something, but nowhere near what they were asking. I was well documented as well (gotta love Quicken), so the deductions for expenses were verifiable.

Mark

[Sam C]

I was well documented as well Excellent!

Not always my strong point but they definitely scared me!

[Oz Nimbus]

I know I need to stop smoking.... Only problem is I turn into king A*hole of the universe when I do..... :D

As per the questions: I'm pretty sure it's over & done. The government guy said he'd be back if there was another complaint, but that's about it. Upon requesting the name of the complaintant, he told me they can't legally take the name of the person when the phone call is made. That really sucks.... and if abused regularly, can turn into legalized harrasment.

-0z-

[Sam C]

he told me they can't legally take the name of the person when the phone call is made

I'm not certain it is true but I have heard that in the U.S., if you turn in a person for tax evasion, and in fact they have cheated, you collect a %. I just don't know if it is urban legend or truth!