average pay in here

I think Danni is with the IRS

_________________
Steve Hedrick
Hedrick & Associates INVESTIGATIVE GROUP
Nederland, TX
TX PI LIC #A-09665
(409) 284-1895
http://360.yahoo.com/ftachaser357
"For every DEFENDANT that fails to appear in Court, there is a VICTIM seeking Justice"

Did I say we wrote $5M? I meant we write about $50K a year in bonds. barely enough to pay the rent!

hehe now,what makes you believe that Steve?

I use Tony "The Weasel's" accountant!

Scott

Steve, I concur!

One of the online courses I took for continuing Education was the class that IRS Agents were taught on "How to audit Bail Bondsman". Very interesting, and sparked a lengthy discussion with my accountant on build up funds not being expenses!
I showed her the course and she got in line quickly!

Scott

_________________
R.E. "Scott" MacLean III

"Leaders are like Eagles, you never see them in a flock, but one at a time"

Chesapeake Group Investigations, Inc.
Chesapeake Bail Bonds
877-574-0500
301-392-1100 (fax)
301-392-1900 (Office)

That is interesting, Scott, since I would think that most if not all of us are filing as "sole proprietors or partners, filing either a Schedule C or Form 1065", so report on a cash basis, where our income and expenses are claimed as they are received and/or paid. That is the standard for most any "service" company. The states that allow "service" companies to incorporate, usually allow only it as an S-Corp, thus it is still a "pass-through" to the licensed shareholders.

The various states along with the IRS mandate how a person, partnership, LLC, or corp can operate, so the tax filings for federal and state ultimately rely on what each state allows. Most (but not all) require that a licensed service business file as some sort of "pass through" company, filing tax returns on a cash basis, so the BUF fund is not income UNTIL you receive it. So, BUF's are not necessarily an expense, but in cash-basis accounting, not income until you recieve the proceeds from them. It isn't an "expense" but is excluded from "income" on the tax return.

FYI for those who don't know my original profession, the CPA in my nickname stands for Certified Public Accountant, and I do well over 100 tax returns a year for various individuals and businesses. If I don't have a ready answer, I know where to find it, so this isn't just a personal answer to a public post. It comes from 25+ years of experience and knowledge.

I have more than enough business to keep me extremely busy, particularly during tax season, so did not make this response to acquire any outside work for taxes or bonds. It was simply a professional response to a professional post.

_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

Kathy,

A couple of years ago, our continuing ed class for bail agents was dealing with IRS rules and regs. Two ladies from the IRS spoke to us for the whole day.

Their bottom line on BUF funds was that it is declared as income since it is part of the premium you collect. Also, since most if not all are held in trust for you with your name on the account, it is basically a savings account. It must be declared as income in the year received, along with the interested accrued.

Thats their story and they are sticking to it.

I guess I can see that, but will do some more research on it. I can see it as being a savings, but since it is a required payment... I guess they could consider it to be "effectively" earned (a major IRS catch phrase) at the time the bond was written. Obviously, they want taxes paid on every penny they can possibly get it on. The problem arises when an insurance company balks at returning the BUF after you have claimed the income all those years.

It is only an issue for me this year, since I was previously writing under another agent who just paid me a percentage, so my Schedule C was based on what I was paid. I do seem to remember that his CPA was claiming the BUF as an expense, or as non-income unitl it was received.

_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

If your surety company takes its directly as part of the "bond costs" you pay up front and the BUF account is in the sureties name only and is not "held in trust" for you, then I think you may be right in not declaring it as income until they relelase it to you.

What is bad for us is that if we don't collect the full premium up front, we still have to pay the full BUF amount to the surety therefore declaring that amount as income. So, as a rule as I just finished a bond 30 minutes ago, we collect minimum 50% up front. That way we cover the suretys comm and the BUF and still get a few bucks in our pocket while waiting on the balance.

My previous "boss" opened the account in his name, with me only as a "survivor" interest in it, so I think I am okay there. Every penny that I collected, I was required to deposit into his bank account, and he deposited a check into my personal account once a week for what I was due. I have all of my paysheets saved on my computer, and can match them with my bank statements showing the amounts that he deposited into my account. Plus, I have multiple correspondences from him and his attorney stating that I will NEVER get what I paid into my alleged BUF account. I plan to file a lawsuit, for not only what I placed into what was supposed to be my BUF, but also against him, his GA, and the insurance company, for what I paid into his BUF that he required me to pay as a subagent. Although requested, he also refused to provide me with a 1099 for my pay. That is another issue that I may report to the IRS when I suggest that they do an audit on him...

At least the general agent and insurance company that I now write for has the BUF in my name, and I get forwarded statements from the bank showing my balance and a 1099-INT showing what I earned in interest for the 2006 tax year.

I do not have any problem with declaring income that I have earned. My problem is in being forced to pay taxes on income that I may never receive.

Then again, I "almost" never take less than my cost (including my BUF) to write a bond upfront, so always make sure that I have enough in my escrow account to cover what I owe my GA at any time, as well as any cash collateral that I have taken, as is required by my state's law.

_________________
Kathy Blackshear
Blackshear Investigations
Blackshear Bail Bonds
Sales Associate, Prepaid Legal Services, Inc.
Walsenburg, CO

Proud Member of the AB Reject Club

Since you're planning litigation against the GA and surety, I don't think you would be willing to divulge names, the surety I mean.

I guess you already tried to solve the issue through the surety and they were not helpful. Once it is over please let us know so we can publicize how those @$%* )9%&* are %&*%)@ pieces of #!^$!