If you like sausage, you should not use GPS or check your state CU scrap copper sales

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SEO said:
What is the world coming to?
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I worked on a government job replacing all of the electrical components in a large electrical vault. I literally mean everything...xfmers, switches, gear, boards, mcc...everthing, total gut and redo.

The electrical foreman and estimator, displaying company ID and driving a company truck, took the components that we removed to an electrical salvage company and, apparently, left with a pretty hefty sum.

It turns out that the salvage company sent a 1099 to our company for the amount they paid out. The sh__ was on! They tracked down the culprits. They weren't fired, but I think they had to reinverse the company.

On top of all of this, the entrepeneurs faced potential prosecution and almost lost their security clearances.
It turns out that any property removed from a Federal Government facility without authorization is stolen, even if it is going to be disposed of.
 
Laws are like sausages, it is better not to see them being made.
-Otto von Bismarck

I think that what Ito is saying is that things appeared fine (and presumably his business was going well), and then this turned up.

-Jon
 
silver lining :smile: at least your able to handle a $74000 loss and you should be able to recoup some of those loses with your new policy in effect - a loss of that size in our shop and were all looking for work secretary included - still sucks though -
 
Trust is relative, I think if you look too closely at any group of people you will see things you have never seen before, some of it will surprise you in good ways and other parts will make you wish you had not looked so closely…hence my sausage metaphor. The old man once told me, “I don’t want to know how much copper they sold or what they do with my trucks, because if I did know I would get mad and fire them.” He was a firm believer in not looking too closely at how that sausage was made so he could sit back and enjoy it after it was cooked.

About 2 months ago things slowed down enough that I had to do a layoff. I got my copper list out and selected my layoffs from that list. Now every time I have a reason for layoffs, I use my list. In the past I would try to carry some men during lean times just to keep good men around but if they are on the list they don’t get carried. When I hire new guys next spring I will do drug screens, background checks (both required for institutional and government work) and now I will be submitting their names to the DPS copper data base; any copper sales above what I consider more than just rabbit will prevent me from hiring them.
 
ITO I like the philosophy of not micro managing your employees. but be careful on the copper data base as a reference tool..

because others might use someone elses name to sell copper..our scrap dealer does not accept new clients without a hassle..so we allow others to use our name to sell scrap and we receive a report at the end of the month from the scrap dealer..the police also monitor the scrap here due to copper theft..

Yet the law requires that you giving copper as scrap to your employees must be listed as part of their wage. so the amount they received must be on their w 2's and you do not have to pay tax on it..just as letting an employee taking you company truck home and driving it to the shop in the morning to get supplies, the mileage is considered income to the employee..either the employee reimburses the company or claims it as income..going to the job site does not count but using the company vehicle to drop by the doctors office is personal use..So micro managing can and will drive you nuts.

I probably would let the whole issue with the copper scrap disappear because if the IRS finds out you have been allowing this without filing the proper paper..I just shutter thinking of the ordeal involved with the IRS..
 
cschmid said:
I probably would let the whole issue with the copper scrap disappear because if the IRS finds out you have been allowing this without filing the proper paper..I just shutter thinking of the ordeal involved with the IRS..
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I don't really see how the IRS could expect ITO's company to file paper work on sales of scrap copper. There would really be no way of knowing who got what. How much was real scrap and how much was just stolen materials.

ON the other hand the IRS would be interested in any employee that sold a substantial amount of copper and didn't report it as income. These guys could end up in much more trouble with the IRS than from local law enforcement.
 
cschmid said:
I guess there is 74,000 dollars worth that is a substantial amount of cash given to employees without any paper..I can see some bad issues there..
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If you give it to them as part of their pay it would be. Most people consider scrap to be small pieces of wire that either get picked up or swept out with the trash. I know of one independant contractor that gets all the scrap off job sites. He cleans ( sweeps and removes the trash ) for the right to pick up scrap copper.

Another thing to consider is that I'm sure ITO doesn't pay these guys to collect scrap ( not if he knows about it ) so these guys are acting as independent contractors while the scrap is being picked up. If they collect the scap on their own time it's none of his concern. It's up to the employee to report miscellaneous income ( there is a place for it on tax forms).
 
growler said:
..There would really be no way of knowing who got what. How much was real scrap and how much was just stolen materials...
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I know to the nearest pound exactly who sold what, the condition it was sold in (stripped or burned off), the truck they were driving and the day and time they made the sale. Picture ID is required in Texas to sell scrap copper, you have to use your own name.

This does pose an interesting problem, do I write the loss off, and if I get an audit do I turn over the names an quantities? This could all get really ugly if I am not careful.
 
ITO said:
This does pose an interesting problem, do I write the loss off, and if I get an audit do I turn over the names an quantities? This could all get really ugly if I am not careful.
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It's probably already been written off as a loss or materials used on the jobs. If it's not been written off then your books wouldn't be correct come inventory time.

In this area we are required to have an annual inventory so they can collect their advalorem tax ( inventory). The best thing would be to conduct an inventory and see what you are showing on the books. If it's missing from inventory and not billed to a job then it could be written off as a loss. If it's just missing and has been billed to a job then it's the customer that's been paying for the excess copper useage.
 
cschmid said:
Yet the law requires that you giving copper as scrap to your employees must be listed as part of their wage. so the amount they received must be on their w 2's and you do not have to pay tax on it.
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and... how would that be determined? add a box to the W-2 showing
the amount of copper in pounds? as it was not under your direct control,
you have no way of knowing how much it was sold for.

and if i sell some scrap wire i'm not "earning" money, i'm selling
something i own. i'm talking about a private citizen selling scrap copper.

if i have, sitting in my garage, a motorcycle, and next to it, 1,000#
of copper, and i sell the motorcycle, would i report it as income and
pay tax on the money received? and if that's the case, then i should
be able to take the cost of goods sold, and deduct it from the money
recieved... so my $11,000 consumer good that i sold for $5,000 two
years later, i should have a $6,000 deduction from my income tax?

how is copper different than the motorcycle? i'm not trying to be a
pain here, but what's the distinction? does that mean that everything
sold on craig's list is income to the selling party?

help me out here...

randy
 
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Fulthrotl said:
if i have, sitting in my garage, a motorcycle, and next to it, 1,000#
of copper, and i sell the motorcycle, would i report it as income and
pay tax on the money received? and if that's the case, then i should
be able to take the cost of goods sold, and deduct it from the money
recieved... so my $11,000 consumer good that i sold for $5,000 two
years later, i should have a $6,000 deduction from my income tax?
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Actually the income from a garage sale is taxable. It's just one of those things that never gets reported but legally should.
 
Fulthrotl said:
and... how would that be determined? add a box to the W-2 showing
the amount of copper in pounds? as it was not under your direct control,
you have no way of knowing how much it was sold for.
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Yes, I do. I know exactly how many pounds, what day, how much they were paid, if it was a check or cash, what they were driving, and how the copper was stripped. There is even a video of one transaction!

and if i sell some scrap wire i'm not "earning" money, i'm selling
something i own. i'm talking about a private citizen selling scrap copper.
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I COMPLETELY agree with you, and if the IRS agreed with us it would be fantastic. There are many instances were we rightfully think something is 100% ours and the IRS legally disagrees with that assumption; this is one of those instances.

The problem is when and where was the copper acquired, because technically even if it was given to you it is income, if you won it in bet its income, if you found it on the side of the road its income, even if it were inherited it could be taxable on some level. Generally the IRS does not care about chump change, the problem is if I list that big of a loss, its not chump change any more, and if I get audited they could choose to pursue those who sold it especially considering some of the sales total more than $10k in a single year for some of them.

Rewire said:
just a side note, I would be very careful in releasing employee info to anyone even police as this could violate privacy laws.
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I checked with my lawyer and there is no violation of privacy by giving names DLs, and home addresses to the police for an investigation.
 
ITO said:
I COMPLETELY agree with you, and if the IRS agreed with us it would be fantastic. There are many instances were we rightfully think something is 100% ours and the IRS legally disagrees with that assumption; this is one of those instances.

The problem is when and where was the copper acquired, because technically even if it was given to you it is income, if you won it in bet its income, if you found it on the side of the road its income, even if it were inherited it could be taxable on some level. Generally the IRS does not care about chump change, the problem is if I list that big of a loss, its not chump change any more, and if I get audited they could choose to pursue those who sold it especially considering some of the sales total more than $10k in a single year for some of them.
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here you go again, using logic and facts to make a point. ;)

it's just a thought.... the only downside i see with this is that nobody
wants an audit of themselves or their business. as for the IRS
coming after a thief, i wouldn't find myself going into therapy over that....

now, in the people's republic of california, i have to provide insurance
so that in the event a thief hurts his back carrying all the stuff he's
stolen from me, he can get proper medical aid.

but in texas, aren't you just allowed to *shoot* them?


randy
 
Fulthrotl said:
y'know, as near as i can tell, electrical contracting would be much
improved if it were possible to just eliminate a few small problems:

the IRS
employees
customers
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No just get rid of the lawyers,the biggest problem with following your lawyers advice is if the guy suing you has a better lawyer.
 
One day when I get the time I have one hell of a lawyer story that is so bad it should only be heard by other contractors.
 
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