Dollars and Incense
I was prodded into the
free-lance-writer business by the Oct. 19, 1987, stock-market crash. Having
been employed as a writer at a major media conglomerate for many moons, I had
collected a substantial stake in the company's profit-sharing plan. So when the
Dow fell 508 points that day and my stake shrank by over 20 percent, I was
hysterical. But then I discovered something quite amazing about my
profit-sharing plan. Its rules stated that when you left the company's employ,
your share got paid out at the values in effect at the end of the preceding
month . In other words, if I retired by Oct. 31, 1987, my payoff would be at
Sept. 30 prices. Dazzled by this magical opportunity to sell at pre-crash
prices, I negotiated a contract with my bosses to continue scribbling on a
free-lance basis, and on Nov. 1, I became a "vendor" of various editorial
materials.
The first
thing a fellow notices after attaining vendor status is that it is harder to
get paid in a timely fashion. As a writer-employee, I had had my paychecks
deposited instantly and automatically in my bank account. When I became a
contract writer, I got paid only after somebody--initially it was a secretary
in the business department--put in a requisition for my pay. This seemed odd
and unnecessarily complicated, since my new contract called for me to receive
the same amount every month, on the first of the month. It seemed doubly odd
when months came where the secretary forgot to put the requisition through. Or,
alternatively, where the secretary put the req through but then couldn't
remember whether the blessed event had taken place.
To be fair, there was only one "did-we-pay-you-this-month?"
call. But my diary shows endless fretting and nagging on my part as the sixth
or the seventh or the 12 th of the month arrived and the check did
not. The situation improved only marginally when the monthly requisitions
ceased and my payment problems were essentially turned over to the corporate
Accounts Payable department. The payments were still generally late, and once,
not having been paid as of the 12 th , I made the unsettling discovery
that I had somehow mysteriously dropped out of the AP payment program
altogether. In the summer of 1989, apparently responding to my endless
lamentations about late payments, AP started paying me ahead of time, i.e., a
few days before the first of the month. This was naturally fine with me until I
realized, late in December, that I was now in danger of getting a federal form
1099 showing 13 monthly payments and requiring more taxes sooner. So I
complained about this prospect, and before long we were back to the default
situation: chronic late payment. I do not believe--or at least cannot
prove--that this signifies a cash-management play-the-float strategy by senior
accounting executives. And yet, there is this nagging question: Would Accounts
Receivable be as relaxed as Accounts Payable plainly is about money regularly
changing hands a week or more later than had been contractually specified?
Speaking
of form 1099, I have still not decided what to do about the one I got some
weeks back from Slate. I had yearned to write for this online journal, and was
delighted last fall when editor Michael Kinsley gave me a shot at an article.
It was about the huge losses taken by the Nevada bookmakers on the Holyfield-Tyson fight,
and I was delighted all over again when the article was "posted" Nov. 22, only
seven days after I had taken on the assignment. How fast it all goes online!
What a marvelous contrast to the slowpoke print media! Except for Microsoft's
payment, which arrived on Jan. 2, 1997, in an envelope bearing a Dec. 28, 1996,
postmark. The case law says, plain as day, that this is "constructive receipt"
in 1997, and the question I face is whether a sane person should fight to
uphold this principle after the Microsoft business-side characters have
nonchalantly stuck him with a form 1099 showing those earnings as 1996
income.
Free-lance writers must also deal with a lot of
paperwork and printed forms plainly designed with other kinds of vendors in
mind. These other vendors are not guys sitting alone at home writing articles.
They are real companies, with legal departments and human-resources
departments. And they are equipped to answer questions about the possibility
that the enterprise is a "small business concern" as defined by Section 3 of
the Small Business Act--to mention only one of many thorny issues raised in a
five-page form that landed on my desk several weeks ago.
Leading
up to its arrival was a telephone query from an editor of a financial journal
that had recently published some of my thoughts on the stock market: "Did we
ever send you the paperwork we need so we can pay you?" Naively assuming that
this would be a request for my mailing address and Social Security number, I
volunteered to provide this information right then and there, on the phone. But
no, the publisher of the financial journal--again, it was a huge Fortune 500
company--needed to know much, much more about me. A special toughie was the
request for my "Dun & Bradstreet SIC number." I assumed at first that this
was some variant of the "principal business or professional activity code" that
free-lancers are required to enter on federal Schedule C (where you report
"business profits").
Like thousands of others in my line of work, every year at
tax time I wrestle with the issue of which four-digit number to write in on
this schedule, the instructions for which mention a huge number of
self-employment scenarios, none of them envisioning a guy creating copy in his
den. Generally, I have ended up choosing No. 7880, meaning that I provide
"other business services," which leaves me feeling somewhat marginalized but
looks as though it would at least be defensible in a showdown with the IRS. But
that was my four-digit code. The D&B codes, as I ascertained after
extensive cruising around on the Internet, had eight or (in some accounts) nine
digits and provided much more detailed information about one's place in the
economy. But how to find out one's number? Instructions that came with the form
counseled checking with "your tax department" or--an even less realistic option
for a fellow needing to get some work done--the local office of the Small
Business Administration. In the end, I brazenly sent the form back without any
D&B code, and one of these days I hope to get paid for my musings on the
market.
As a New York City resident,
I get to pay city income taxes twice. It's incredible, and it works this way.
The 1099s one garners during the year are of course cumulated and reported on
federal Schedule C, then carried over to New York state form IT-201, which
takes you through the state and then the city income-tax calculations. The
combined marginal rate for the state and city taxes was recently running around
11 percent, which is bad enough. But when you have paid it all, the New York
City Department of Taxation and Finance taps you on a figurative shoulder,
reminds you that the city also has an Unincorporated Business Tax, and states
firmly that free-lance writers gotta pay this too. The UBT covers the same
earned income paid to the city on form IT-201, and this time around, the bill
comes to a flat 4 percent (after $10,000 of deductions and exemptions).
Not one employed journalist
in 100 has even heard of this ghastly double dip or experienced the surge of
fury I felt when I called up the Authors' League in 1987 to ask why they
weren't screaming about it. The woman I spoke to coolly asked how much I made
as a writer, judged the amount too high to warrant condolences, and said I
should be glad to pay my share. She was obviously not a vendor.
