Latest news on 1099 Forms?

[S T]

What is everyone doing on their business clients regarding the 1099 reporting for 2012 for tax year 2011?

Example:
I have a small biz client that is a schedule C and is already receiving requests for completion of W-9 form from larger business or corporate clients of his?

His credit card companies for credit card receipts (processing client's payments) and also credit card charges have requested W-9 forms.

Should he also be requesting W-9 forms from his vendors and accounts that he pays for goods/services?

I am advising all of my Rental/Landlord Clients - that is a non issue

Just wondering about the business clients?

Thanks,

Sandy

[Gretel]

Even though my hope that the whole reporting deal gets revised and approached again with more common sense, I still want to wait maybe another 6 months.

I am advising all my biz clients of the situation and also of the rush that could happen if they wait too long. I am suggesting to wait until September unless Congress has done something to ease the situation.

[taxea]

I am advising my rental clients to obtain W-9 prior to purchase/hire and also hoping this law is pulled soon.
As for the business clients it doesn't go into effect until 2012 so I am not going to confuse them now. Who knows, I may not have to deal with it at all by the end of the year.

[mactoolsix]

EIN number

We have advised all our rental property owners to get an EIN. They won't need it until they fill out the 1099's next year, but who wants to send out their SS# (required on the 1099) to everyone they may have dealt with last year?

[S T]

I agree with your strategy

But then that raises another question

If the owner of the Rental Property is an individual or a husband/wife, let's say and is a Schedule E tax filer attached to a Form 1040, and you obtain an EIN# for 1099 Reporting purposes, how is that going to match the Schedule E attached to the form 1040 which is being reported under the owner's SSN#? Won't the IRS be looking for some type of form 1065 or 1120S or 1120?

Same issue with a Schedule C - Sole Proprietor attached to Form 1040 - but 1099 forms issued to the EIN# of the Biz - My Biz client has an EIN # for payroll (must have) can I have my Biz client fill in the W-9 with EIN# as a sole proprietor? That is not what the instructions say

Another Example: Husband and wife own rental property - they are asked for a W-9 form - they file as individuals as a married joint return filing Schedule E - they have to report under a primary SSN# usually the husband SSN - if they apply for a EIN# as a partnership - then IRS will be looking for a partnership return

As a biz owner, I have had an EIN# for my biz - some years I have an employee and some years not - as a tax preparer I have always used the EIN# and my PTIN# on the returns rather than my SSN, but I am listed as a sole proprietor so IRS is not looking for a form 1065 or other return, just my Sched C - All of my 1099's are issued in my SSN# not my EIN #

Such conflict Maybe IRS will give all these rental people and Sole Prop Biz Owners the option and a new W-9 will be produced, so we don't have our SSN# floating around.

More confusion?

Sandy

[Gretel]

I am sure it will keep the IRS (and us) plenty busy with correspondence for not matching ID#'s.

However, everyone using their SS# for all this reporting I call a fool with all the ID theft going on. All Schedule E filers are between a rock and a hard place, at least for now.

Maybe they just need to revise Schedule E to allow for input of EIN, same as they have on Schedule C?

I also wonder how many of the single member LLC's use the correct EIN on their Schedule C or Schedule E for that matter. You are required to apply for an EIN as single member LLC and if it happens to be a rental LLC the IRS already has to deal (or doesn't deal) with this situation.

It sure will keep all of us busy and I hope for every one of us that we charge our hourly rate and are not feeling bad for the poor people because the government is messing things up. Hey, if they need more funds to deal with paperwork they just increase fees and/or taxes.

[S T]

Same Thoughts

Thanks Gretel for your thoughts,

On my one Biz client for sure, that already has a EIN# for payroll and is shown on his Sched C - I am just going to fill out a W-9 form for him under his EIN# and we will see if anyone bounces it back on him, since he is a sole proprietor.

Guess I will try to apply for the Rental Clients as need be and we will see what happens.

Sandy

[JON]

1099s

reported to the IRS are not for tracing back to the person filing the 1099s it is to trace to the person who is getting paid. The filier of 1099s will face larger penalties and eventually may lose some deductions if they do not file 1099s.

The Government wants to show that the TAX GAP is closing, and they need the money.

[S T]

Requests for W-9 forms

Given that already, biz clients are receiving requests for W-9 forms from their clients and also their vendors,

Sole Propreitor - files Schedule C has a TIN# already

Question: Provide the W-9 form using the TIN# for the Business or the SSN# of the sole proprietor?

Taxpayer is stressing over how IRS is going to match up to his tax return and concerned about the "bounce back" notices at a future date.

Thoughts?

Thanks

Sandy

[JohnH]

I'd only provide the TIN# on a W-9 for a sole proprietor.
SS# is just too valuable a piece of info to be sending out to everybody you deal with.

1)The requirement is probably going to be eliminated anyhow.

2) If it isn't eliminated, IRS is going to have such a mess on their hands they either won't be able to match anything up or else they will be pestering everybody because they will have so many mistakes in their system.

[ttbtaxes]

We have advised all our rental property owners to get an EIN. They won't need it until they fill out the 1099's next year, but who wants to send out their SS# (required on the 1099) to everyone they may have dealt with last year?

How are you completing Line 9a of the SS-4 application if a husband and wife own rental property they've been reporting on Schedule E of their personal return?

9a requires that you disclose the type of entity. It's not a sole proprietor. If you check partnership the IRS will be looking for partnership tax returns in future (and perhaps prior) years.

Edit - I didn't read the full thread before posting my question to this particular post. The question still remains how on earth do you fill out Line 9a.

[erchess]

Ss4 L 9a

How about "Other" and specify "Sch E Rental"?

[S T]

Agree with your approach

Thanks John H, that is my approach, but on the other hand this stressed out client is trying to "nail me to the wall" stating you are my accountant you should know.

I simply said I am giving you the info as I know it right now - it is your choice TIN# or SSN# - We have "no clear - direct" guidance from the Govt-Irs, etc. We are all doing the best we can.

What I really wanted to say was "RELAX" - just go with the flow - we are tring to accomodate and do the best we can.

So in the end of the conversation, we agreed on only furnishing a W-9 form with the Individual DBA: Business and the TIN

But you just gotta know this client is going to come back and give me grief on the "first mis-match"



Sandy

[veritas]

The W9 instructions says

If you are a sole proprietor and you have an EIN, you may
enter either your SSN or EIN. However, the IRS prefers that you
use your SSN.

I would only provide an EIN.

[Burke]

Absolutely agree.