Mike Filsaime is a Fucking Idiot

No, not because he started an affiliate network where charged people to join and had the shittiest payouts possible, but because he got beat by the tax man.

I have a junk box setup for guru bullshit and i saw this email from Shoemoney. I don’t know if it’s “OK” to publish this email, but Shoemoney can send me the C&D like he does to everyone else that mentions his name with commercial intent. Go get yourself on shoe’s list so he doesn’t have a hissy fit and pretend you got this email too.

Anyway, this email chronicles the story of Mike Filsaime’s retardation of not doing the proper paperwork for the IRS. Even the most half-assed business person knows about 1099’s… and how someone generating millions of dollars a year DID NOT DO THIS IS FUCKING AMAZING TO ME.

Really dude? Fucking millions of dollars a year and you couldn’t afford a fucking CPA (cert. public accountant …. not the other CPA) that went “Hey, wait a minute Mike… I think you need to fill out some 1099’s” You figured “Paypal was good enough?” WHAT THE FUCK IS WRONG WITH YOU? HOW THE FUCK DID YOU GET THIS FAR IN LIFE?

The best part of this story, and by best I mean worst, is that Mike Filsaime is leveraging his stupidity into a product called Pay People Online. This product tracks 1099’s or some shit for people you pay through paypal.

WOW MIKE GREAT IDEA. HOW COME I DIDN’T THINK OF THIS?! Oh because I have a CPA that doesn’t smoke fucking crack and tells me obvious shit.

This story exemplifies the disconnect between real life businesses and online businesses. You think just because it’s online the same rules don’t apply? Well, when it comes to the IRS, you better believe they do. Now you’re $1.5 million poorer HAHAHAHAHAH!

From Shoemoney:
As I always say I learn 100x more from my failures then from my successes. What do you find more scary? Getting dinged by the IRS for 1.5 Million dollars in fines and penalties or having the FTC break down your door and virtually bankrupt you? One story we will cover in this email and the other in another week.

Mike Filsaime has been one of the biggest internet marketers in the world. His products have done millions in sales annually. Mike also has an army of affiliates that act as commission based sales people to sell products for him and he has paid out hundreds of thousands of dollars to them for years. I am sure many of you reading also pay people in some regard… maybe you have affiliates or maybe you just have contractors or other people you pay money to. All of you can benefit from hearing Mike’s story.

In Early 2008 the IRS conducted a random audit on Mike Filsaime’s company. There was nothing Mike did to trigger the audit, well other then being in our industry and the crazy spikes we see in revenue setting off some “Red Flags”. Anyway… They went over all of his financial records going back 7 years and came back to him with a huge mountain of paper work asking where his 1099’s were on all these people he had paid money to.

Mike told me for years he had been paying money to affiliates via PayPal and figured that was good enough records to keep on them. He had no clue he needed to also get a 1099 on every person he was paying money to through PayPal. After all… PayPal has records on these guys right?

The IRS told him it did not matter what PayPal had. It was HIS responsibility to have the 1099 tax forms on file for each of these people he was paying money out to. OUCH.

Mike said they not only let him NOT deduct those expenses but now HE now had to claim that income on that money that was actually paid out to people.

But here is where it really sucked…. bad…

Since some of the people Mike paid were way back in the early 2000’s… and he now had to claim that as income…. Guess what? That’s right he had to pay the taxes PLUS a fine for each infraction AND interest on that money FOR THE LAST 7 YEARS.

Now the actual money paid out to affiliates that he did not have 1099’s on only totaled a couple hundred thousand dollars but Mike had to write a check to the IRS for back payments, fines, and interest for over 1.5 MILLION dollars…. ZOMG!!!!!!!!!

So what did Mike do wrong? He always paid all his taxes and took proper deductions. He just did not have good paper work and that cost him 1.5 million dollars of his hard earned profits.

Mike told me over a year later he still thinks about it at least once a day what he could have done with that money. Help family and friends… Build a school for children in a 3rd world country…. geez…

But like most bad ass serial entrepreneurs Mike figured out how to turn his experience into an incredible positive.

He created a service that completely prevent people from ever ending up in his shoes. Honestly I can’t believe someone has not thought of this yet.

The website is called Pay People Online and its pretty hot. Right now its 100% free to use.

The way it works is you upload your payment file to it… then if it does not have someones electronically filed 1099 on record it emails them and tells them they need to complete it in order to get paid. Once this is done it lets you know.

For users who use PayPal Mass Payment files (like 99% of us) its even easier. You just upload your mass pay file to it, it then checks to see if it has 1099’s on file and if not emails people and lets them know they need to fill it out to get paid, then spits you back out a payment file for people you DO have 1099’s on.

Slick eh? I really like this site and I think its going to turn out to be worth MUCH more then the 1.5 Million that it cost Mike to have an epiphany about this much needed service.

I say it all the time adversity is opportunity and this is a classic example of just that.

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