What are Tax ID's?
Written by Dick Hodgin --  m80@nando.net

Question:  
        My band recently played a gig at a local college.  They wouldn't 
pay us until we gave them a Social Security  or  TAX ID number.  We wound 
up giving them my SS #. What does  this mean, and how will it affect me? 
Will everyone who books my band ask for this ?
 
 
Answer:
 
        This means that the College is planning to list what they paid 
your band as a deduction on their taxes.  To do that, they have to fill 
out a 1099 MISC. form and put some ID numbers on it for the IRS, which 
shows who is taking the deduction and who got paid the money.  They have 
to send you a copy of this form 1099-MISC. by the end of January of the 
following year to let you know that they are filing this with the IRS. 
Just because you don't get the form doesn't mean they aren't reporting 
it. 
 
        If you give them your own personal Social Security Number,  the 
1099 - MISC. will be issued to you in your name and YOU will be 
responsible for accounting for the entire amount of what your band was 
paid on YOUR tax return.  This can be a problem if you don't know much 
about taxes. You could wind up having to pay the income tax or 
self-employment tax for that gig. (Even if your band split up the money)
                
        The "FEDERAL TAX ID #" sometimes called an "EMPLOYER ID #,"  is 
an identification number issued to identify the business activities of 
your band.  You can obtain a FED Tax ID by writing to your regional 
branch of the IRS (Memphis for North Carolina) and requesting  form 
SS-4.  On the form,  you'll be asked to give some information regarding 
your band and who is responsible for the tax returns.   At the end of the 
year,  a tax return for that number has to be filed with the IRS.  
        The kind of business you are, (Corporation, partnership, sole 
proprietor, etc.) will determine whether or not you'll have to pay taxes, 
or if the profits from your band are to be applied straight to each 
person in the band's taxes  
 
        Not everyone will ask you for  and identifying number.  A great 
number of clubs and other types  of organizations operate on a cash only 
basis, so they  won't be issuing a 1099-Misc. to you.  It's important for 
a band that is playing on any kind of a regular basis to have a Tax ID 
Number.  You won't be able to get certain jobs without one. (or you'll 
have to enough up someone's SS #)
 
         Next issue I'll be discussing the difference between 
Corporation, Partnership or  Sole Proprietor for bands.  Don't forget,  
send questions to m80@nando.net