0:00 [Music] welcome back to careful boys today on a very serious note the state of California is trying to destroy JK news they froze our bank account we didn't do anything illegal okay but um the Ed which is the Employment Development Department of California they're hurting and um right now there's a new law right and they're coming coming after a lot of creators digital companies they're coming after a lot of small businesses that work with a huge amount of contractors so like over covid right A lot of people had to work from home a lot of people stopped uh they got laid off or they quit their jobs they're not going into the offices anymore and
0:51 what's happening you know now we have a more digital gig economy everyone's becoming Their Own Boss uh what traditionally was called like like a W2 worker like someone on a salary someone getting paid by the hour they're becoming now independent contractors which is a different tax file it's a it's a $10.99 you're Your Own Boss if your Uber driver Postmates delivery freelance graphic designer photographer all of those plumbers cleaners if you know contractors and traditionally like these are like people that come in and they'll do a quick gig for you they'll provide a service and then they'll bounce they'll do some other stuff right um well in entertainment that's been the standard for small production companies you know just like us whatever it's been the standard but here's the issue is during Co Ed was giving hella employment
1:42 money unemployment non-stop right and now they're hurting for cash like everybody's leaving California and so um cuz that was the kind of not the scam but like that was the thing that everyone was doing where they would file for unemployment and I remember people getting like 700 bucks a week up 900 bucks a week so at that time there's people that are unemployed and they're making like 3 4 Gs a month and then all that money starts draining out cuz everyone's filing for that like one person would do it another person oh ████ that's a ████ ton of money and I think at that time they're trying to buy people's sentiment of like why California is so dope but then the problem is now it's back it's backfiring back to like the business owners yeah they don't well they're also coming after a lot of people who got too much unemployment too oh true mainly the Ed is is is well the state of California is
2:32 hurting and now they're coming back and trying to get more money back right and so uh there's a new law that came out is it the ab5 law it's the one yeah it's it's the one that's basically targeting the definition of what an employee worker classification right yeah and so it's a new law which means that there's no precedent there's no case before it it's the WAW West they can determine whatever they feel is an employee mhm so we got audited a lot of small businesses got audited right they go through and then they they scrutinize they go okay so what did they do and what did these guys do whatever now don't get it confused with the IRS the IRS people complet it is tax but it's completely different right uh they are actually well-versed in this department
3:23 they understand how like expenses work and all that the Ed they don't know how that works Employment Development Department yeah all these guys do is collect uh like the employment tax for the state and also like they deal with employment things okay so then for them they're like okay uh you're an employee they're just making this ████ up so because there's no law before that they they they scrutinize all of our stuff they know that we pay uh businesses you have a company everyone has a company like and then you guys also do work outside of JK you guys been you know working in other Productions doing you know you you design Interiors for Tiger Billy all this stuff you work like you know standup everywhere else right in China but in the definition of California you're actually my employee
4:14 that's what they're claiming they're saying that you're an employee because you're coming in to film with me in California look at this guy he's your boss whatever you need yo I I I can do I I I argue that you're not my employee because D I got it because I never had an interview with you I never I never gave you a salary I never gave you I never you know it's like the the traditional like steps of onboarding an employee I've done none of that yeah and I think you're a free agent like you come and go as you please if you miss today you miss today you're not going to get fired it doesn't matter right and then so you can go on another podcast go on podcast if you're employee for night you can't be going to rebok Adidas ████ F whatever I've done W Fu
5:05 videos bro I'm a traitor my might you would yeah for me it's like if you work for somebody you would have to sign something that would be an agreement right yep how does that work you just show up this is the great area of the law is they're just saying that he looks like a duck talks like a duck must be a duck so he's just calling people dude no ████ duck here's the thing watch us by the way hey what's up brother they they went through all of our videos right and then they're they're they're if you're going to take the money anyway buy socks well they had to audit the company they had to look at what kind of company it is how you guys make him money all this stuff right and they're like well you film in California and then we're like wait wait wait wait wait here's the thing we do a lot of our work in Vegas we do all of our meetings we do I live in Hawaii like most of the
5:56 year right whatever and so they had to go back and forth and then at the end they made a determination right they're like oh you guys owe this much in taxes my CPA and and you know he has a power attorney he's been dealing with all of this and he's just been reporting to us and then I was like okay cool so um let's appeal it because obviously they're trying to say that the cleaner that we got the AC guy that we got is an employee and I'm like no we paid these people out to fix ████ and clean stuff like they don't work for me and then they're like no no they're your employees now you have to collect all these taxes for them or that that that you you didn't pay them or or that they didn't pay whoo like yeah anyways so we put an appeal in and then um in may they said hey we got your appeal thank you whatever um we're going to look at it
6:46 over review fast forward to uh you know July and um we get a message from our Banker saying hey did you know your account was frozen uh what did you not pay any taxes or something and I'm like no we're always pretty good with that so I hit up my CPA and he goes call him and see what's going on cuz I have no idea what's happening come to find out right the collections department and the Agents processing and auditing they didn't ████ talk so they confirmed that they got the appeal right and they're looking over it the guys that were collecting the money where were like dude these guys haven't even uh sent a a check in you know they're late you know what they're
7:36 probably trying to run from us so let's go freeze their account yeah and then they're supposed to send you letters and all these things too but what's weird is so like I said our CPA is the power attorney he's the one they've always been talking to calling they have his email right for some odd reason they decided to send us a snail mail letter to a place we don't even check it's not even a registered address it's not so we're like why the ████ would you send that that so so they did send us a notification but I was like but he's the one on the list his address is on the list the mailing address is his his point of contact yeah so I'm like and you've been talking to him this whole time and you know we don't live we don't live in California you know we don't freaking we're never here so I'm like why would you send it there is it just negligence is it like
8:28 deliberate so they're like like you know so what the hell is going on it's probably the same people from Trump's security detail yeah IDI that make sense yeah so we got yeah so we got frozen right and then so uh once the CPA found out he was like okay let me just call the agent and you know we'll work this out and then so he gets you know passed around oh I got to send you over to this apartment he leaves a message he doesn't get a call back he's been playing phone tag he finally gets it right and he founds out he finds out that that the appeals Department don't even want to look at it so I was like wait say that they're just like yeah we're not going to look at it like basically they're kind of not taking reasonable arguments as legitimate wow and so he's like this is extremely different and weird because he goes I work with the IRS all the time
9:19 and he goes those agents are actually very reasonable because most of them were CPAs most of them understand tax law most of them have common so if you tell them like hey dude like clearly the cleaners that they hired is not an employee the plumber that they got to fix the thing he's not an employee and they're like that's true he's not right so but the Ed people they're not looking at any of that they're just going this is what we think and this is what it is wow and they can do that because there's no law or let me rephrase that they can do that because they know that it's going to cost us more to fight it with a lawyer so it's not about right or wrong it's about I know I can do this to you cuz it's cheaper for you to pay than to get a
10:09 lawyer right and then so they this is really the tricky part cuz cuz the CPA was telling me he was like you know what's weird is like it's going to cost way more than 30 40 Grand to litigate this so that means to do it legit if you want to be right but he goes they calculated the correct amount that they know yours business won't suffer from but you'll probably submit and he goes they're making it extremely easy for you to pay within a year and then so he goes when I called them up I offered them you know 2500 down as a as a good faith payment and then every month uh you know we'll pay it off and maybe we'll do it in a couple of years it's it's reasonable and then the agent goes oh well on our system we we we think in a 5,000 down would be fine and and then um
11:00 he's like wait so you even have a payment system already ready to go and he goes the IRS the Franchise Tax Board no government agency has that standard he goes the IRS doesn't even make you do that so he goes once you like you're supposed to go back in forth and agree on a good faith payment but the but the Ed just has it already for you and they're like not only are you wrong this is the payments you're just going to do wow yeah and he goes and then he goes and if you want to go over a year well you got to send your company projections you got to send all the cuz then we could change the estimate now Jesus right it's ████ up it's really ████ up and then so I was like so how can they do this because it feels like we're guilty before we're proven like innocent and then I'm like the the closest thing I can think of is is it like when you get a traffic ticket and you have to pay
11:51 it and then you go to court and then then when you're right then you get paid back and he goes yeah so first what we have to do is we're just going to have to pay if we want the total funds released he goes you have to agree on the payment system we just can't fight it and it's crazy that we have to pay to get our money that's the crazy part until it's sorted out and then if the peel goes through then they're like oh yeah you guys are right this is your money all along but then you get this ████ money that's like drawn out and there's opportunity cost yeah and then there's like it's we're not able to use it and then we have to maybe struggle with payroll or whatever it's just like what the ████ we got to sell more ████ socks sell the socks we got to buy the socks but the but the thing is like imagine how many uh other companies they do that to how many just give up and say ████ so here's the thing right how many
12:41 people say ████ it I'm leaving California after this for real dude I see why we want to go to Vegas so so my cbaa which is also my family member right he's been in the game for decades and he told me that this is what the government does he goes like they never ever come after big dogs cuz if you go after Sony if if you go after Universal like all these guys they they have the money and they do the same thing they they pay for independent contractors all the time if you have an actor if you have a ████ sound guy whatever they do it all the time right but yeah like you said they have so much ████ money they'll hire like a team of they probably already have an internal Le also probably the CEOs of ████ son's golfing with the guy who runs that exactly dude oh no problem Tod get the ████ out of there so they're looking for businesses Tod that are probably making under 5 mil right cuz all that is
13:33 considered pretty small in the eyes of the government yeah they're looking for businesses that might be able to afford just as much but not the lawyer team that can fight this case and then even then they're not getting everybody who's in the same like field you know what I mean cuz they did that to kjas as well and we were going through a ████ ████ show of a Time Ed Ed specifically Ed we got audited by Ed as well I remember during that season this is like just just right after the pandemic we had to get every one of the guys to grab all of their tax documents from getting paid from other stuff to show that they're not just K's workers like if they did a movie they have to show those receipts or if they taught a class for this studio not just our studio if they want got like these gigs or whatever we had to prove all these other financials to show that that's how operate our entire
14:23 operation was then not everybody solely relies on kindas as like their only form of payment and that ████ was a nightmare cuz you're just like doing your own internal audits as well in order to figure out this audit and same thing like Joe said like they just have this whole power over you and you just got to do it you know what I mean it's when the lobsters like go after like some lady who owns a liquor store instead of going after like a bank or some ████ cuz they know they can get they can actually intimidate you and win yep yeah and they know that you know when you're a small business you just rather pay than to deal with the hassle especially because when there's no precedent right like when you are the first um it's like a big freaking deal and it cost a lot of money and a lot of time because they have to hash out all the little details and it's just not worth it cuz it can kill a small business for
15:14 fighting it so I'm like dude I wonder if there's other small businesses out there that are dealing with what we're dealing with and if there's something that we can do to kick up and make some noise or whatever but it sucks that they can take your money without any type of discussion or any type of reasonable appeal they can just do this to you it feels like hey I thought we lived in a free country and we're we're allowed to like actually go by and have common sense law and all that but they're just taking from people and musling you out mhm cuz they're like yeah you could take us to court and do with the legal way but I'm like you know we can't afford that right I just think what kind of boss let you drink at work I mean I buy the alcohol for I know I'm just saying like I don't know that's
16:04 kind of crazy to me like the idea that he's my boss like you got I mean we call him ████ boy yeah dude if I called my boss ████ boy I'd probably get fired get fired me and Anthony we do drugs in the bathroom all the time all the time a good amount a good amount I call them funny eyes but Ed you should see our our ████ text group to each other call him ████ boy all day long and this is not everyone's main source of income no no so this is where I'm just like why the ████ you can't even call this income I break even dude I pay so much money to come here and we shoot during the weekends it really really ████ gets me dude we Face to come here we lose money to come here yeah 100% ████ up here and get canceled what the ████ that too it ruins Our [Music] Brands look at us fun I did I did have cool tattoos one silver lining of
16:55 dealing with all this ████ and that was the thing that uh initiated like more than half of us to get our personal llc's done yep cuz we were always talking about it but we were like oh you know like the independent contractor was simple enough you just get paid out for your gigs and stuff like that right and then all this ████ went down we spent like ████ N9 months dealing with it getting audit paying ████ tons of money as well wasting hell of time and then we're just like ████ it everybody just LLC up and then but you know what the ████ part of that is like when you when you start a business and you start like working with businesses and vendors and stuff there's a set of lws so there wasn't a need to because anyone that works as an individual you're immediately classified as Soul prop you could use your Social Security that's the first way right so everyone's okay cool so you think like things are going to be the way it's going to be and then you kind of on cruise control you don't
17:45 have to Fork over the $7 or $800 to pay for the LLC right but then you do that and then all of a sudden they switch the rules on you now you have to be in LLC like what the ████ I was doing this thing this way and then now you do other gigs and like let's say you you dance but you also do maybe Consulting for whatever so now you have to open another LLC because they don't want to see you Crossing like you know funds or an accounts so that's another 800 bucks so it just sucks that like they don't have a set of rules that they just ride with it's they constantly change it cuz even with our independent contractor status like uh rcpa is really good where he told us in the beginning everyone that's an independent Contra uh contract have to follow like these 10 or 12 steps like we dictate your own schedule or whatever whatever whatever so okay cool make sure everyone follows that and so with that we're like Tech technically everyone is an independent contractor but then when the Ed comes they go no we're just going
18:35 to start from scratch no one is now you got to prove your innocence again when we literally like checked all the boxes before we started it's ████ and it's because the IRS is a different department from the Ed and the IRS they we comply with the law they're like yeah that's true what LLC is it's it's it's called a pass through right so what that means is yeah you can still be a soul prop but what it does is like it's just protection mhm so like they can't come and take your house or whatever you know unless you sign a personal guarantee or whatever but that's that's that's being too like NE like my like you know what do you call it like yeah yeah to to simplify things right right the way the the the government looks at the entity and the tax code right like whether you have a LLC or you're doing it as an
19:25 individual it's the same ████ ████ so here's the other thing that pissed me off right so let's say um I own an LLC but somehow Jesus is paying me as joj takawa and not my LLC they're saying oh see he's an employee I'm like I have a ████ LLC and when I file my taxes it all goes through one anyway crazy so so he didn't pay my LLC that doesn't make make it you know that's so ████ stupid it's like hey I came over and I ████ cut your grass or whatever and then you paid me out instead of you paid my company out and just because of those mistakes it's like oh they're your employee it's ████ nuts and the thing that sucks is the true reason for all of this because the state's hurting that's why they're like shaking everyone down cuz other states don't do stupid ████ like that well they made the mistake of
20:15 throwing around money like signing out all these you know giving out all this money dude nice dude hang on I'm watching pornet work sorry dude your employees your bz's right there dude come on you're get in trouble you're going to get me in trouble play and then we'll come back no dude press play damn dude what' you type in what' you type in it's a huge D I don't like the fact that simple man I don't like that yeah so here here's what I heard white people too from what a lot of other CPAs are are saying too is that uh number one they're not even looking at any reasonable appeal I don't know did you guys appeal or do anything we appealed did it work at that time uh it just delayed it and then it eventually kind of worked a little bit but basically we just took a crazy number cuz we were it was high five digits and then we brought it down to Mid five digits but did you start paying first and then they they they they
21:07 settled afterwards uh this was like 3 years ago I think we I think we got it to an appeal and brought it down and then started thinging okay so they wouldn't even look at our appeal and that's what's happening right now right is like there's no reasonable contest we have to just pay and then we have to hope that they'll actually read it and then and then we can settle for for a reasonable amount yeah I'm all about fighting the man but that girl's giving a good Hawk too godam tell you dude this place is the best I'm all about fing the man but God damn girl you can take the whole thing that's what being a contractor is all about you can watch porn out work and you won't get fired cuz why you're not an employee for me to fire an let's do some shots right now now watch por
21:58 right now all right let us know my are dealing with crazy ████ like this because we just want to connect with other business owners somebody out there that works at the Ed that can help us out I know please buy the socks buy the merch nothing helps to show more and also see bl by make sure to come on down
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