Cluster of bad experiences

[Kevin Slater]

Clients are not required to issue 1099s to escorts. Clients are not in the "trade or business" of hiring escorts:

 

Trade or business reporting only. Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit......

 

Thanks, Scorpio. I didn't know that and arrogantly assumed you were mistaken. Of course you weren't. Thanks for educating me.

 

But now I'm confused. I always thought the IRS tried to get income information on freelancers by requiring a 1099, but if it exempts non-professionals from filing, even that facade of verification is gone. They truly rely solely on self-reporting, eh? I always knew that was how it actually worked, but I thought there was some lip service to a theoretical paper trail.

 

Kevin Slater

[Scorpio]

Thanks, Scorpio. I didn't know that and arrogantly assumed you were mistaken. Of course you weren't. Thanks for educating me.

 

But now I'm confused. I always thought the IRS tried to get income information on freelancers by requiring a 1099, but if it exempts non-professionals from filing, even that facade of verification is gone. They truly rely solely on self-reporting, eh? I always knew that was how it actually worked, but I thought there was some lip service to a theoretical paper trail.

 

Kevin Slater

 

You're welcome. I should have indicated that the italicized portion of my previous post was from the instructions to Form 1099-MISC.

 

The IRS definitely uses the information it receives to enforce compliance. So rest assured that if you receive a 1099 and fail to report that income on your return, the IRS will send you a notice within 12-24 months looking for the additional tax.

 

But yes, a large part of the US tax system is based on the "honor" system for certain items. A taxpayer is required to report income from all sources whether or not a 1099, W-2, or similar information form is received. Compliance might be enhanced if non-businesses were required to issue 1099s to their independent contractors. But there is already a requirement that household employers issue W-2s to their household employees (cooks, nannies, maids, gardeners, etc.) so that receive more than $1300 in a calendar year that is largely overlooked. So adding the additional requirement would probably be overlooked as well.

 

Can you imagine trying to get your escort to fill out a Form W-9 to request his social security number, mailing address, etc., before payment is rendered?

[Guest danwallace]

Under current law, an individual an gift $13,000 per individual/per year without affecting his lifetime exclusion. Gifts are not taxable to the recipient. The client could claim the payments were gifts, as it wouldn't affect the client one or the other. However, gifts are gratutious transfers. The IRS would most likely recharacterize these payments as compensation and win. Making the "gift" taxable income to the escort.

 

Actually part of this statement is not true. To say gifts are not taxable to the recipient is simply not true.

 

IRS Rule on gifts

■True gifts. This rule applies only to true gifts. You can't avoid paying income tax by calling something a gift when it isn't. For example, a "gift" you receive in exchange for services or some other consideration isn't a gift.

 

While an audit, by the IRS, of this nature is highly unlikely, I wouldn't worry too much about it, unless of course you have friends or clients that know your real name and decide to drop a dime to the IRS. It happens.

The poster is correct, there is a $13,000.00 true gift exemption each year. He is also correct that if during an audit, the examiner rules that this is classified as compensation and not gifts, the "donee" would be liable to pay income tax on that amount as well as Social Security tax (FICA) penalties and interest.

 

Hope this helps

[Scorpio]

To say gifts are not taxable to the recipient is simply not true.

 

 

I agree, which is why I said gifts involve gratutious transfers. A payment for services IS NOT a gratutious transfer, it is compensation. Compensation is taxable; gifts are not taxable.

 

You can call compensation a gift as much as you like, but it doesn't change the substance of the transaction (Substance Over Form Doctrine).

[Guest danwallace]

I agree, which is why I said gifts involve gratutious transfers. A payment for services IS NOT a gratutious transfer, it is compensation. Compensation is taxable; gifts are not taxable.

 

I am not trying to split hairs, honestly. I am just quoting from what I learned and what the IRS statue states. IRS assumes gift to be taxable FIRST and then when they meet one of the many exceptions, they become non-taxable gifts. So, in a round about way you are very correct, I was coming at the question from a different angle.

 

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

 

Gifts that are not more than the annual exclusion for the calendar year.

Tuition or medical expenses you pay for someone (the educational and medical exclusions).

Gifts to your spouse.

Gifts to a political organization for its use.

In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

[Scorpio]

 

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

 

Gifts that are not more than the annual exclusion for the calendar year.

Tuition or medical expenses you pay for someone (the educational and medical exclusions).

Gifts to your spouse.

Gifts to a political organization for its use.

In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

 

This is true, but this is from the donors (givers) perspective, not the donees (recipient) perspective. A taxable gift refers to potential gift taxes that the donor may owe for transferring property barring an exception not any income taxes to the recipient. In my 20+ years of practice, I know of no situation in which the recipient of true gift bears any potential INCOME taxes.

 

But the situation described early is not a true gift; it is compensation for services.

[Mark Gordon]

Black List

 

I vaguely remember that there is a mailing list or website where escorts can list no-show clients. Hopefully one of the escorts that frequent this forum can confirm or deny this.

 

http://www.blacklistednow.blogspot.com/

[Guest chibear]

Cluster of bad experiences from escorts

 

I don't get it~LOL in more ways than one. Cluster of bad experiences by escorts-one guy who I saw regularly over a long period of time racked me over the coals for missing an appointment. Had to cancel at the last minute because of illness. Needless to say he lost me as a client. Another guy I saw semi-regularly cannot commit to any appointment. The third one, who I was going to fly half way across the country for a weekend and he expressed great interest after several emails back and forth said he would call me that week to finalize, haven't heard from him since.

 

I am a decent client, treat the working boys like guest, prepared and clean in and out, always tip, which there is not even a thank you after wards. In these tough economic times, I find it hard to believe that escorts would walk away or ignore a big chunk of change. I am disappointed in all this and have stopped hiring for a while. After hiring out for so many years, maybe it is time I give this up completely. Lessons learned perhaps?

[Guest LeoWalker]

The third one, who I was going to fly half way across the country for a weekend and he expressed great interest after several emails back and forth said he would call me that week to finalize, haven't heard from him since.

 

I'm reading this to mean that you were going to fly him to you. Either case, you should not be waiting until the week of to purchase plane tickets. I generally prefer my clients to schedule such trips a month or more in advance. Generally, 2 weeks is the absolute minimum...unless the person is excessively wealthy...and even then, I would probably raise my rate because they're going to interfere with my direct upcoming plans.

 

Doesn't sound like the escort was planning for it to happen whatsoever. In my experience, if someone is interested in an overnight, the plane tickets and all other monetary negotiations are handled within 2-3 days of original contact.

[cmennow]

Nonetheless when an escort insists that money be paid in advance, there is an assumed and built in distrust of the client by the escort. This distrust sets the stage for a potentially disappointing experience for many clients.

 

Not all clients feel this way but I do and many out here have expressed their concurrence.

 

An escort is "shooting himself in the foot" by requiring advance payment from a client.

 

 

Would it be to much to put in the ad that money will be asked upfront so that the client is aware of the escort's demands and can choose to make that decision? This might help with being blindsided with asking for the money up front and causing the interaction to go south from there. Just my thoughts.....Let me know if I am off base.

[Guest zipperzone]

Nonetheless when an escort insists that money be paid in advance, there is an assumed and built in distrust of the client by the escort. This distrust sets the stage for a potentially disappointing experience for many clients.

 

Not all clients feel this way but I do and many out here have expressed their concurrence.

 

An escort is "shooting himself in the foot" by requiring advance payment from a client.

 

 

Would it be to much to put in the ad that money will be asked upfront so that the client is aware of the escort's demands and can choose to make that decision? This might help with being blindsided with asking for the money up front and causing the interaction to go south from there. Just my thoughts.....Let me know if I am off base.

 

Let me suggest the following scenario. The escort does not state in his ad or in the course of arranging the session that he wants to be paid upfront.

 

He arrives at the appointed time and tells the client that he wants to be paid before anything happens. This is the 1st the client has been made aware of this condition.

 

The client say "No - it is my policy that I pay at the end of the session".

 

Now........ what is the escort to do? He has 2 choices. Go ahead with the session and trust that he will be paid at the end - which in all likelihood will not be a problem.

 

Or, he can turn around and leave. IMO that would be a very dumb move. Not only is he out the time it took him to prepare and get there, he has also failed to earn the money that will presumably allow him to keep food on the table and his rent paid.

 

Can anyone explain to me how this is a win for him? Sure, he has stuck to his principles, but to what avail?

[Guest mvan1]

 

Now........ what is the escort to do? He has 2 choices. Go ahead with the session and trust that he will be paid at the end - which in all likelihood will not be a problem.

 

Or, he can turn around and leave.

 

 

He has a third choice. He can get violent with the client and try to intimidate or force the client into giving him money. There have been reports of that happening.

[Orson Kane]

Time to close this thread and start another?

 

I think Michael Vincenzo long ago gave his last word here about the thread he started, namely clients not keeping appointments or shorting him on payment. Now at nine pages, this thread seems to have veered far away now to tax reporting requirements -- Maybe when the topic of a thread takes a fair turn it would be better to start a new thread. Even if someone were interested in following this discussion of tax reporting, they might never catch it if they saw the title of Michael's original posting.

 

This applies to any thread that starts to go off the original topic -- Not a bad a thing necessarily - but just an attempt to make it easier to find things on the message board and not mix topics together (worse when there are three discussions rolled into one)

[+ ArVaGuy]

He has a third choice. He can get violent with the client and try to intimidate or force the client into giving him money. There have been reports of that happening.

 

Which happend to me about 10 years ago.

 

Now I always clarify when payment is due and the guys who want it up front do not get hired.

[+ newatthis]

Let me suggest the following scenario. The escort does not state in his ad or in the course of arranging the session that he wants to be paid upfront.

 

He arrives at the appointed time and tells the client that he wants to be paid before anything happens. This is the 1st the client has been made aware of this condition.

 

The client say "No - it is my policy that I pay at the end of the session".

 

Now........ what is the escort to do? He has 2 choices. Go ahead with the session and trust that he will be paid at the end - which in all likelihood will not be a problem.

 

Or, he can turn around and leave. IMO that would be a very dumb move. Not only is he out the time it took him to prepare and get there, he has also failed to earn the money that will presumably allow him to keep food on the table and his rent paid....

This exact scenario happened to a friend of mine a couple of months ago. The e.i.q. (escort in question ), who, IIRC, had taken off his shoes, put them back on, turned around and left. My friend picked up the phone and managed to have someone else in his room within a couple of hours.

[Guest zipperzone]

This exact scenario happened to a friend of mine a couple of months ago. The e.i.q. (escort in question ), who, IIRC, had taken off his shoes, put them back on, turned around and left. My friend picked up the phone and managed to have someone else in his room within a couple of hours.

 

I wonder if the escort who left actually thought he had won that round?

[Guest mvan1]

 

Now at nine pages, this thread seems to have veered far away now to tax reporting requirements -- Maybe when the topic of a thread takes a fair turn it would be better to start a new thread. Even if someone were interested in following this discussion of tax reporting, they might never catch it if they saw the title of Michael's original posting.

 

 

 

This thread went off topic because of a mistaken idea that a tax form would be required.

 

However, the thread is no longer off course and has returned to the initial discussion, namely, escorts who want to be paid in advance.

 

I see no reason to start a new thread over a mistaken idea that has since been resolved.

[Guest RyanCade]

Very well spoken Michael. I am in total agreement and from my own experience, I understand completely.. Though, I have not adopted your policies, I have on a few occasion felt it was necessary to look out for myself by asking that payment be placed in view in advance.. The last time I made that call it backfired, putting my reputation and career as an escort on the line. I do not plan to take that route in the future. I will however trust my intuition, taking subtle warnings more seriously and opting out all together, avoiding the negative experience all together.. Damage control is no fun and definitely not worth whatever gains I would hope to procure.