1099MISC with subs refusing to give social security #

[Snaggletooth]

They Do What They Want

Joan, no disagreement with anything you've said, but the sad truth is Congress WANTS the EIC to flow freely from the coffers of the govt.

IRS could do a better job, but fact is they are much more likely to come after the tax preparer than the perpetrator of EIC fraud. In the first place, they can't collect the money from people who have already spent it and no longer have it.

A friend of mine does some 2500 returns annually, some 80% of them with EIC. And did contact their congressman and senator. He found out that Congress is not concerned with an orderly process of disbursing these refunds -- their objective is that the money get poured into the economy quickly and couldn't care less whether the rules have been followed.

There was, of course, a pretense of upholding honest values, but you didn't have to go very far to realize that dispersion of wealth was their main objective, and honesty stands little chance of getting in the way.

[Gary2]

Unless it's a 50/50 custody arrangement where the parents are counting days down to the wire, the noncustodial parent should KNOW they are not allowed to claim the child without the express permission (by way of the 8332) of the other parent. Any preparer worth their license (another point for mandatory CPE) will know the questions to ask. If the taxpayer lies to the preparer, its fraud.

Yes, but if there's no preparer, then what they should know and what the IRS can prove they did know are two different things. And even if the preparer asks all the right questions, and is capable of convincing a jury that they asked all the right questions, how do you argue against "I misunderstood what my preparer was asking"?

That's why it takes repeat offenses to get enforcement. Once the IRS has sent the letter saying "Your EITC has been denied because the child didn't live with you," it becomes easier to make the case "you knew about it because we can prove that we told you."

[taxea]

Page 6 of the general instructions for Form 1099 says:



It then refers you to the backup withholding instructions that basically say to start backup withholding.

It is interesting to note that nowhere in the instructions does it say you have to secure a W-9 prior to making your first payment to the recipient. It merely says if the recipient fails to furnish you a W-9 with the TIN, you have to start backup withholding.

So in your case, I would simply issue the 1099-MISC to the recipient and IRS with the TIN box blank. I would also attach a note to each stating the recipient refuses to return a W-9 with a valid TIN. You might also inform the recipient that there is a $50 penalty for failure to furnish a TIN, and that he/she should expect correspondence from IRS concerning this.

I read the instructions to mean that the client is are responsible to get the info before the work begins and if the worker refuses to provide it then withholding should commence with the first payment. The client shouldn't be asking for the required information after the fact.

I would further suggest that every worker, as a matter of company policy, be given both the W-9 and a job application and be required to complete both prior to hiring. When reporting the 1099 I would include a copy of the worker's job application. I don't remember what cannot be asked for on an application but at least it would have a driver's license number for identifying information if you are not allowed to ask for an ssn, which I doubt.

I don't agree that the client should hire the worker if the worker refuses to properly identify him/herself.

[Burke]

I would further suggest that every worker, as a matter of company policy, be given both the W-9 and a job application and be required to complete both prior to hiring.

Can't be done, as the W-9 requires an SSN be provided. Against the law, until an offer to hire has been made and accepted.