IRS Delays Gig-Tax Filing Rule for Side Hustles of More Than $600 (wsj.com) 125
The Internal Revenue Service on Friday gave millions of Americans a one-year reprieve on new tax-reporting requirements, delaying implementation of a law that requires e-commerce platforms such as eBay, Etsy and Airbnb to give the tax agency information on users with more than $600 in revenue. From a report: The delay means the platforms won't have to send sellers and the IRS a blizzard of 1099-K tax forms early in 2023, and it gives opponents of the $600 threshold more time to push for a change in the law next year.
"The additional time will help reduce confusion during the coming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements," said Acting IRS Commissioner Doug O'Donnell. Congress passed the $600 threshold for Form 1099-K reports as part of the American Rescue Plan Act in March 2021, scheduling it to take effect for tax year 2022. Until the change, platforms had to report users' income to the IRS if they had more than 200 transactions and $20,000 of revenue. Lawmakers lowered the threshold to boost tax compliance in an area where it is often lacking -- unreported business income.
"The additional time will help reduce confusion during the coming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements," said Acting IRS Commissioner Doug O'Donnell. Congress passed the $600 threshold for Form 1099-K reports as part of the American Rescue Plan Act in March 2021, scheduling it to take effect for tax year 2022. Until the change, platforms had to report users' income to the IRS if they had more than 200 transactions and $20,000 of revenue. Lawmakers lowered the threshold to boost tax compliance in an area where it is often lacking -- unreported business income.
This Rule Was Bullshit (Score:5, Insightful)
Every month my roomate paypals me $600 for rent and bills. Every few weeks I have lunch with my daughter and when we split the check I cashapp her a few dollars or she does me. Now how do I prove these are not payments but just paybacks?
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Venmo added an option for "business or friend" earlier this year. I dont use cashapp so I have no idea if they do. Presumably they will have to, as well.
Re: This Rule Was Bullshit (Score:4, Insightful)
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Try one weird trick that no civilization has ever made work! (Tax collectors hate it!)
Also, snark aside, we had an election just over a month ago. If it is "election season" again already, then we should be happy that our representatives feel so accountable.
Re: This Rule Was Bullshit (Score:2)
Re: This Rule Was Bullshit (Score:2)
It will be election season FOR SURE in January, 2024, and the likelihood that this level of tax documentation will be generated when the current administration is trying to get re-elected.
Starting this on 2023 (for tax year 2022) made sense because it put some distance between the new policy and their re-election campaigns.
Re: This Rule Was Bullshit (Score:2)
Re: This Rule Was Bullshit (Score:5, Informative)
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sales taxes are highly regressive.
A pure sales tax is regressive.
In practice, sales taxes usually exclude food, rent, and other necessities[1], making them much less regressive.
Everything doesn't have to be taxed at the same rate. We already have higher taxes on tobacco, alcohol, and gasoline. We could do the same for luxury goods like yachts and expensive cars.
[1] In California, flower seeds are taxed, but vegetable seeds are not. I tried to argue with the cashier that some flowers, such as nasturtiums, are edible, but she just laughed at
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Hawaii is great; sales tax is on services, food, rent, diapers... everything is equal!
Fortunately it is 5%, but still a painful tax.
Well, not as painful as the transient occupancy taxes (to which they add sales tax as well...)
Re: This Rule Was Bullshit (Score:2)
Everything doesn't have to be taxed at the same rate. We already have higher taxes on tobacco, alcohol, and gasoline. We could do the same for luxury goods like yachts and expensive cars.
This backfires every time it's tried - I remember when the US gov't had the brilliant idea to tax luxury yachts to finally get millionaires and billionaires to pay their fair share, only it clobbered the shipbuilders and ancillary industries putting thousands of workers out of their jobs.
https://www.nytimes.com/1992/0... [nytimes.com]
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it clobbered the shipbuilders and ancillary industries putting thousands of workers out of their jobs.
This is the Broken Window Fallacy [wikipedia.org].
If vandals don't break windows, glaziers will be unemployed. If rich guys don't buy yachts, shipbuilders will be unemployed.
But in both cases, the money will be spent on something else (or invested), generating jobs elsewhere in the economy.
Re: This Rule Was Bullshit (Score:2)
Rich guys bought yachts from other countries.
Re: This Rule Was Bullshit (Score:2)
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Re: This Rule Was Bullshit (Score:2)
Because the 7% tax on an item "hurts" the lower-income person than the wealthy person.
The fact that everyone pays the same amount on their purchase of the same item at the same price, while mathematically fair can easily be described hurting the lower-income voter for political advantage, claiming "they can't afford it."
Politicians have convinced people that pay no net income taxes that people that actually pay any net income taxes are somehow not paying their fair share and need to be paying more...
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A sales tax is neither regressive nor progressive if all services are taxed at the same rate.
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It is called a "use tax", and California has this.
Basically, if you buy anything in California, you pay a roughly 9% sales tax.
If you import anything out of state, you pay a similar 9% use tax.
So, no you cannot buy your Tesla and have it delivered to Nevada to avoid the tax. You'll have to pay up the difference to "use" it in California.
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Re: This Rule Was Bullshit (Score:3)
The issue was, once upon a time, a collector could go to a NYC art auction, buy a million-dollar painting, and have it "shipped" out of state and avoid NYC sales taxes... only, the customer would walk out of the auction house with the painting fo r their NYC apartment and the auction house would ship an empty crate out-of-state relative of the buyer.
Or, they would order a ship from a ship builder and have it delivered in a tax-free state like New Hampshire to avoid paying Massachusetts sales taxes, only to
Re: This Rule Was Bullshit (Score:2)
Re: This Rule Was Bullshit (Score:3)
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I really, really hate when the ultra wealthy use that excuse and think that it's actually a good argument to appease the lower classes. It's the same as letting the fox make all the laws that govern the hen house; "Hey, killing all of the chickens is legal, don't blame me."
Unfortunately, most people don't have the privilege of buying laws that benefit them like the ultra wealthy do.
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So your solution is a regressive tax that would hurt the people you allege this negatively impacts far more?
You should have posted AC. This is embarassing.
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The problem with consumption tax is that it hits the ordinary people and the poor much harder than the rich. It's easier for the rich to dodge too.
The burden would be too high if the tax take was too be maintained.
Re: This Rule Was Bullshit (Score:2)
The consumption tax can be limited to non-essential items, excluding things like rent, medical expenses, food, clothes, etc. - this isn't anything different than our current sales tax system where 'essentials' are tax-exempt.
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Doesn't really help that much. For example, businesses are usually exempt so people who can buy things through their businesses. Ordinary people who just work for a salary or wage can't use that dodge.
Re: This Rule Was Bullshit (Score:2)
You got to start somewhere. And most likely moving personal expense to your business is tax fraud. For instance business suits are not considered business expenses.
If you get caught by the tax auditor, the fine will probably be substancial.
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We should tax only on consumption. A nations sales tax. No IRS. No returns. Incentivize saving money in your local bank so they can lend it out, paying interest to you, collecting interest from lendees. That would be the best solution. Every billionaire with a yacht would pay hefty consumption tax and the rate can be adjusted annually to the prior yearâ(TM)s expenditures.
Yep. Check it out. www.fairtax.org.
And its better than a flat tax because there is a prebate every month to reimburse you for what you would spend up to the poverty line for necessities. So the poor could effectively pay zero taxes still. Low income folks are impacted more on a flat tax than the affluent.
But dont let the lies of the detractors fool you. Yes its a 23% tax, but the IRS is GONE (by law it cant kick in until the IRS goes away) so you get most of that back by taking home your entire paycheck. So
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I actually checked out FairTax.org. The name sounded nice; they lost me at "Learn how the Biden Administration is weaponizing the IRS." The irony of ignoring how the Trump Administration actually did weaponize the IRS kind of kills any potential credibility.
Don't get me wrong-- of course the IRS is a weapon, just like it is a tool for revenue generation for operation of government. Threats of audits are scary if you have complicated taxes. I'm not threatened anymore... I made my taxes simpler to the poin
Why did that lose you? (Score:1)
The irony of ignoring how the Trump Administration actually did weaponize the IRS
Yes and? Is Trump president?
News flash, every president weaponizes the IRS!! Obama did also! But what good is it talking about that now, only what the current president is doing matters and can be changed.
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The value is in making it an institutional failure rather than politics. You do know how to make a convincing argument, right?
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I did, you'll understand someday what was meant I guess.
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It is election season
I'm pretty sure I can find a reference to this reasoning being given literally every month of every year here on Slashdot. The USA is in constant state of either having elections or campaigning. "Election season" has lost all meaning.
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Pretty sure there was that exception (Score:1)
And where in the new law does it say the $600 threshold only applies to transfers declared as business, rather than personal use?
I can't find reference to it but I am pretty sure I read it did include that exemption.
However that makes the whole thing pointless since everyone will just tell you to mark it personal.
So basically a bad law, either evil or pointless, that should be tossed out not just delayed.
So then rule is Extra Bullshit (Score:1)
When sending money, Paypal asks whether it's for business or personal use.
And what is to stop people from marking every transaction they ever send as personal?
I am on some forums where people buy/sell things, as a side business - they already explicitly state all buyers need to pay marking the transaction as friends/family.
So what good is a rule the entire population will simply hack around? Why even have it, except to use as a tool to punish selected targets?
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Intent. The first is clearly related to their share of rent, the second is clearly a familial relation. In neither case are you generating any income from the event.
Try harder.
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Ok genius, everyone is aware of that...but you still have to PROVE it to the IRS. Otherwise it's just a "magical" credit to your account, that is being relayed to an agency that can punish you in various forms.
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Ok genius, everyone is aware of that...but you still have to PROVE it to the IRS. Otherwise it's just a "magical" credit to your account, that is being relayed to an agency that can punish you in various forms.
The IRS is not going to take one look at this. And even, if by chance, they do, they'll clearly see the intent.
What they are looking for is a constant stream of money coming in in varying amounts from some type of employment. That is why the business part is required to submit their portion. The IRS can match up what the business part is saying with what shows on your return. Just like is done now on places such as Onlyfans.
Re: This Rule Was Bullshit (Score:2)
The IRS has already calculated how much revenue the newly-authorized 87,000 new employees will generate. The bulk of those workers will be performing audits, and the bulk of the audits performed historically are targeted at "lower income" earners (under $250K).
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Wait ... Do you actually believe this bullshit?
LOL!
I know that you don't understand anything about income taxes, but I can assure you that the IRS does.
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Most people aren't scumbag tax cheats and thus have no problem whatsoever with this change.
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Most people aren't scumbag tax cheats
Spoken like a true elitist scumbag! The kind the peasants would have paid special attention to in the French Revolution.
A guy just making ends meet in an expensive city has a moral duty to evade taxes as much as possible, as they effect that individual to a far more unfair extent than the elite like yourself living in that same city.
How cruel, and frankly evil of you to attempt to pry money out of them for your own needs.
But then we all know you are "Narcc", ultimate to
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Because my dumbass room mate won't use anything else.
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it's easier than you think. paypal won't report this transaction because it's a friends and family transaction. only payments made for "good and services" will be reported. so even if this law were to apply for filing 2022 taxes next year you would have not had to declare them at all
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> Every month my roomate paypals me $600 for rent and bills. Every few weeks I have lunch with my daughter and when we split the check I cashapp her a few dollars or she does me
I don't get why you'd have to justify that, is paypal really considered a platform 'such as' these:
"a law that requires e-commerce platforms such as ***eBay, Etsy and Airbnb*** to give the tax agency information on users with more than $600 in revenue"
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Oh, such a mystery...
Should I just assume that everyone complaining about this is incapable of simple math or filling out a tax form?
This should only affect you in a meaningful way if you're actively cheating on your taxes.
Re: This Rule Was Bullshit (Score:2)
You probably should replace actively with creatively
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Actively or creatively, it's still cheating.
Re: This Rule Was Bullshit (Score:2)
Once implemented, this rule will cause countless 1099K forms to be sent to you and the IRS, and if you choose to not account for them on your income tax filings, the IRS will certainly want you to explain why.
You will be on the defensive, trying to explain you were only selling un-needed household items and it wasn't a taxable "side hustle"... Good Luck.
I understand many Americans decline to deduct home office expenses because it is a red flag for tge IRS to audit your return. I suspect countless Americans
Re: This Rule Was Bullshit (Score:2)
Please tell me how I am going to get countless forms!
I don't sell on hustles platforms. I use cash apps occasionally, but all these transactions are for friends and family and are tagged as such. So none of my usage fall into the "goods and services" criteria.
So who is going to send me tax forms exactly?
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if you choose to not account for them on your income tax filings, the IRS will certainly want you to explain why.
I want to to explain why as well! Why are you trying to hide your income?
Stop trying to defend scumbag tax cheats.
You will be on the defensive, trying to explain you were only selling un-needed household items and it wasn't a taxable "side hustle"... Good Luck.
You're a lying sack of shit. It's trivial to tell the difference between a yard sale and a business.
I understand many Americans decline to deduct home office expenses because it is a red flag for tge IRS to audit your return.
You're an idiot and so is anyone who declines to deduct home office expenses because of some nebulous fear that they'll be "audited". Not that it should matter even if you weren't full of shit. An audit is nothing if you're not a lying scumbag. The only reason to fear an audit is if you're
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If you make $7200 a year off a room, you should include it in your income declaration and pay income tax on that. If it's more splitting bills with a common landlord, you two should pay separately.
Lunch money have to be much lower amounts than rent, nothing that tax services will go after you about. If you are concerned you could just alternate payments and take note of the sums but only transfer once a year, it's only going to be a very small amount lower than tax threshold.
Re: This Rule Was Bullshit (Score:2)
If I eat a $50 lunch with a friend every week, and if that friend sends me his $25 share of the bill over a payment service, that adds up to about $1,250/year, far in excess of the $600/yr threshold.
If cognizant of the above possible tax implications you alternate, you each take turns paying the lunch bill, you'll still exceed the $600/year threshold.
The only way to avoid the above scenarios is to either split the check at the restaurant, or simply take turns paying the bill without reimbursing each other..
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that adds up to about $1,250/year,
I meant you pay in turns and transfer the *balance* once a year. The balance after one year of paying in turns is what is going to be very small (standard deviation of the invoices along the year divided by square root of number of weeks in the year see https://stats.libretexts.org/B... [libretexts.org] equation 5.3.6). Calculating balance is certainly unnecessary, but GP seems to enjoy mathematical precision by transferring "few dollars" to his daughter (or receiving few dollars) every week.
What was the terminology used by IRS (Score:2)
I for one seriously have to be skeptical of a federal income tax return that refers to business plans as hustle or gig Soon it might even ask if I tip waitresses.
Re: This Rule Was Bullshit (Score:2)
Don't worry, we're unlikely to see this ever be implemented, since they've now "kicked-the-can" to 2024, which just happens to be an election year, and it would be a horrible time for the current administration to be seen as "sticking it to the little guy" by going after their side-hustle income...
I think it will be tough for them to claim they're going after the millionaires and billionaires by tracking YOUR side-hustle income selling handmade items on Etsy...
Cash facilitates privacy and freedom. (Score:3)
Cash and barter are the sole transaction methods which offer privacy. The race to a cashless society put convenience over everything else, as if cash was somehow difficult to use.
Cash also works during grid and network outages. I carry about a thousand dollars (fear not, thieves don't yet have X-ray vision) which is not a lot in 2022 and of little consequence were I mugged (I refuse to live and work and play where that is reasonably likely, having grown up in a place where it WAS likely!).
I also tip in cash
Make it more clear (Score:1)
Being slightly blunt helps: "I tip in cash, fuck the Man" goes over very well
Another way to get across this message is to write "Taxes are theft" in the tip line then tip in cash, which I have seen some people do as well.
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Now how do I prove these are not payments but just paybacks?
Keep accurate records. And if you're unable to keep records indicating they are paybacks then they are not and you should pay taxes on them.
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600 seems low (Score:5, Interesting)
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Re: 600 seems low (Score:3)
it's funny when a site that uses to represent nerds, misses a simply inverted mythical-man month fallacy...
Yes, you end up with more taxable "revenue" which largely will be deducted since most of it isn't "revenue". So to try to capture that tax, you might try to increase auditing but even if you didn't on whatever would be currently audited, you increased your work. Now all those people at the IRS get paid and by Including so many transactions you exponentially grew this problem. So ultimately there is a b
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Most of the auditing will probably be automatic. If you get work though Fivr or some similar service, they can simply report your income to the IRS.
Re: 600 seems low (Score:3)
The issue is that if selling a sofa for $600 qualifies as business income then it also has business expenses associated with it, and it is likely a money losing transaction. The resulting administrative and accounting expenses, fights with the IRS, audits, and legal expenses are likely to cost more than the resulting revenue.
It will be a clear win for the lawyers and accountants involved. The additional paperwork should generate significant revenue, which can definitely be claimed as a business expense.
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It is estimated that this rules change will generate an additional $8 billion in tax revenue through 2032. Doesn't seem worth it to hassle millions of Americans with additional filing requirements for such a small sum of Federal tax revenue. Unless you're a tax accountant.
Re: 600 seems low (Score:2)
It is not going to change tax filing for most americans because they don't sell on those platforms. Your weekly $25 venmo from your friend for repaying lunch does not qualify as a business expense. So it won't count toward that $600 limit and you won't get a tax form!
Re:600 seems low (Score:5, Interesting)
Stuff like this is bau functioning as designed. It also serves a double purpose and that it pisses people off and makes them angry at taxation which you can then use to argue against taxation in general and then cut taxes on those super rich people.
It's all the giant trick.
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Work, income, capital gains, dividends, gifts, inheritance should not be taxed at all. Only destruction of resources (consumption that destroys products and consumes services) should be taxed if anything should be taxed at all (I am against all taxes, everything should be paid for by user fees and donations).
People's work must not be taxed by those who have the political power, they must not be allowed to tax work. There must not be any forced redistribution of work, income, investment capital, inheritanc
Re: 600 seems low (Score:2)
It's $600 aggregate, an easy amount to exceed if you're paying a cleaning service, handyman, babysitter, etc. for service over the course of a year.
Re: 600 seems low (Score:2)
If you are paying them, then YOU don't get a form. They do!
Use cash or crypto, people (Score:4, Informative)
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crypto is property according to the IRS so guess what, if you buy a pizza with crypto you will have to pay capital gains if the bitcoin price was higher than what you paid for it.
crypto is tax hostile and that's why it will NEVER succeed as a currency unless the tax laws are changed.
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Rather, the IRS is hostile to crypto.
Multiple nations now reflect BTC as currency, and thus don't have this tax implication.
If/when BTC gets wider recognition, the IRS may follow suit. This means that as long as BTC is stable an unchanged, this increases the likelihood that the IRS will change.
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LOL! Crypto is a scam, not a currency. Unlike cash, Crypto leaves an indelible paper trail. Only an idiot would try to use crypto to hide income form the IRS.
Then again, criminal scumbag tax cheats like you aren't known for being the best and brightest.
Good luck unloading your monopoly money. You're very rapidly running out of suckers.
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Cash exists. Crypto exists. Private wallets exist. Stablecoins, gold-backed coins (PAXG), bitcoin lightning, and Monero exist. Learn to use them.
One of those is not like the other. Specifically you have be quite stupid to use crypto - a system that maintains a public an open ledger of transactions in any attempt to dodge taxes.
But then you're promoting the use of crypto so stupid is par for the course.
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Re: Use cash or crypto, people (Score:2, Informative)
That's total horse shit and I wish shit like that could lead to something like community service education into American Laws 101.
I can give my Church money and no taxes. I can give the girl Scouts money and no taxes and I think that includes buying Thier cookies. Community car washes, no taxes. Giving money for Christmas, no taxes. Pretty sure political donations are tax free. Hell go to the reservation and have a great time at the casino, no taxes...all transactions... no taxes.
Re: Use cash or crypto, people (Score:4)
Re: Use cash or crypto, people (Score:3)
Do you often pay taxes when you give people money? In the examples you describe it's up to the receiver to properly file for tax-exempt status to avoid them having pay taxes on your payments/donations.
The rule was bullshit indeed (Score:4, Interesting)
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Re: The rule was bullshit indeed (Score:2)
I lnow people who make about $100k off etsy, facebook market, and ebay. They should be paying their taxes just like me. It's only fair.
Re: The rule was bullshit indeed (Score:1)
What is the difference? (Score:1)
2024 (Score:2)
May have to wait until after the 2024 election.
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Yawn... You're like the boy who cried 'civil war'. It's boring.