 Now, the first thing that we need to understand is that every business transaction has at least two entities involved in it, one of the entities generating revenue for goods or services that they provide, the other entity generating an expense, which possibly could be a deduction for goods or services that they paid for. So in our case, we've got like a lawyer on the lawyer. Providing legal services, let's say the small business on the right-hand side is paying for those legal services. So then the question is, well, how does the IRS, how do taxes fit into the situation? What might the IRS's concerns be if you were, for example, the IRS? From the IRS perspective, we have an income tax. Therefore, the person that is generating revenue, the person getting paid for the goods and services that they are doing, the IRS is going to want to make sure that they report that income on the taxes so that they're going to have to pay taxes on it. The one that's paying for the goods and services, the IRS might be concerned that they overstate possibly the expense. Now, from a tax standpoint, who's the one that's actually benefiting from a tax standpoint? You call this a tax return? On this transaction, the one that's actually paying is the one that gets a tax benefit. The one that's getting paid, of course, is making money generating revenue. That's good for them. But for taxes, remember, everything is flipped on its head. It's actually bad for taxes because they're going to report that as taxable income, most likely, and pay taxes on it. Taxes? I don't pay no damn taxes. The one that's paying gets to report it as an expense for taxes. Expenses are normally good, but for tax, I mean, normally bad, but for taxes, they're good. So the IRS actually has the leverage more on the person that is paying. So they might go to the person that is paying then and be able to say, hey, look, if you want that deduction on your taxes, my tax deductions are crying. What we want from you is to tell us who you paid. So you can see with the tax law and where the IRS starts to insert themselves, where they have leverage on the payer, the one that might get a benefit from the deduction. So how might that look, of course? Well, then you'd say, well, if this person was employer of the employee, and the IRS might actually kind of force this situation to happen, they're going to say, hey, look, this lawyer is working exclusively for you and you're telling them exactly what to do or something like that. Therefore, we think that they are characterized as an employee, not a contractor. So starting now, I'm an employee. So you might not have a whole choice on that. But if they are an employee, then of course the IRS has like a lot of leverage on the person that's paying the employee. They want you not only to report the income that you paid to the employee, but they also want you to withhold that money and not ever even give it to the employee, but instead give it directly to the government, directly to the IRS. And of course, they want you to report the W2 income, which shows the gross pay as well as the withholdings, giving that form not only to the employee, but also to the government. Remember, that's the key point. The government really is the one that wants the W2 form. So obviously from an IRS standpoint, they're going to frame it as though they're forcing the employer to be nice and give the employee the information that they need to file their taxes, just because the government's trying to look out for you. But obviously, what really the government wants is for the employer to do the job of being the tax collector and the one that's reporting the income and actually take the income and report it on their behalf. So that's where there's kind of the most leverage, and that's our most normal form that we expect to see, that of course, being the W2 form. Now, what if there's a situation where the person on the left is a contractor and the person on the right is paying them as a contractor? Well, then there's less leverage, but you have a similar situation. And the choice as to whether someone is a contractor or an employee is not totally freely up to these two individuals, right? You have to see if you qualify as a contractor or an employee. But let's say that they're a contractor, and so now the IRS would still have the leverage on the person on the right. They're saying, hey, if you want to deduct that on your business report, on your schedule C or whatever your income tax, then we still, we won't make you actually take the money from the contractor before you pay them and pay them on our behalf with a withholding, but we still want you to give us some kind of form 1099 so that we know who that you paid. And when the person on the left then filed their taxes, if they don't record income, stay on a schedule C, that is at least equivalent to the 1099 reportings, then they will most certainly get some kind of letter saying from the IRS saying that they have under reported. So that's where the leverage is. That's the general idea. That's why the businesses basically are doing what they do. That's where we get these major forms that we use to construct our taxes. The IRS is putting the leverage where they have the leverage on the payer side of the transaction to get those forms, not only to you, but principally in their mind, of course, from the IRS's perspective to them, so that they have the information. Now you can imagine a situation where this system doesn't work for the IRS to kind of be able to double check the income of a business. So for example, if this person on the right was not a business, but an individual that was hiring a lawyer for their personal purposes, then the IRS is not going to have that same kind of leverage to force this individual to give the lawyer sole proprietor, for example, a 1099 in that case, because they're hiring the lawyer for personal purposes and therefore they wouldn't get any deduction for it. So the IRS wouldn't have any leverage. And many businesses that are like cashed based, you have the same kind of problem. You've got the hair salons, you've got restaurants, you've got nail salons and those types of businesses where the end person is going to be the actual customer paying for personal goods and services. Then the IRS cannot go to the person that got their haircut or something like that, for example, and say, hey, look, we want you to give us a 1099 for the person, the sole proprietor, the contractor that cuts your hair. Why? Because the IRS has no leverage in that situation because you don't get a deduction for getting your haircut. And more recently we see businesses that are going to be in the gig economy where we have similar kind of situations where a platform is linking people together so that you have these small businesses that we couldn't have before. It's kind of like a new silk road where now you have people that want goods and services and people that can create a business providing the goods and services by having this silk road, this new technology connecting the two together, which are these basically platforms that can connect people together. You can see how the IRS would be skeptical of that situation because once again, they have no place to say, I want someone to issue me the 1099. I want someone as the IRS would be saying to give me the withholdings in this transaction. And you can see what they're going to try to possibly do in those kinds of cases. They might try to make the platforms hire the people that are using the platforms as employees instead of having letting them create their own business, or they might go to the payment processors, the pay pals of the worlds and the credit card companies and force them to somehow issue the 1099. And this is like a big issue going forward that I think a lot of people aren't very well aware of because the income tax system used to be something that was checked and verified through more like random audits. So you were basically filling out your tax return and it would be similar to a situation legally as you driving on the freeway. The cop, the policeman could pull you over on the freeway for speeding, but that would probably only happen like one out of 20 times that you're speeding. But you know that if you get a ticket, it's going to be quite a costly experience. Therefore you don't speed. That was the general concept with regards to the tax code as well. You file your own taxes, you get audited from time to time. If you get caught in an audit not doing what you're supposed to do with filing the taxes, then you get hit in the audit.