Deatbeat client no undergoing background check

[erchess]

I have a call on my voicemail. The Caller ID and the recording identifies the caller as being with the U S I A and gives a number at which she can in fact be reached. She wanted my fax number which I provided on her voicemail alolng with a note later in the day repeating the number and saying I had not gotten her fax. She told me in her voicemail that she is investigating the guy for a security clearance and needs to know what work I did for him. The fax will detail what she wants and include his signed permission for me to provide it. This is a client for whom I prepared several years of back returns and a collection information statement pursuant to getting him an installment agreement about two years ago. Being naive at the time I did not collect my fee up front and I have yet to collect it. I therefore have three questions.

Please confirm that what he already signed probably does not give me the right to say anything or give anything to her concerning him and that I need the same authorization for release of tax information that I would need before I could provide them to say a lender. Please also confirm that one option that would make the IRS happy would be for me to provide whatever to him and let him provide it to the U S I A or not as he sees fit.

Second, may I decline to cooperate until I get paid? If I take that course of action may I tell the U S I A why I am at least temporarily balking at their request?

Third, if I decide to write off the debt do I have the right to issue him a 1099-C?

[Koss]

Background Check

What is U S I A?

I can't really form an opinion on this without knowing what the so-called authorization form says, and who the third party is.

I don't think it would be appropriate to even acknowledge that the guy was your client unless you get a proper 7216 authorization.

But you can't send a 7216 authorization to her, because then you are effectively revealing that you have tax information about the guy. You may end up having to tell them that you simply can't provide any information, or answer any questions, unless the guy calls you first. And then you can explain to him what he needs to sign, and ask him if he ever plans to pay you.

I don't think you are legally obligated to respond to this kind of request, in any manner whatsoever. If it was an active client, who was paying you, then you would be motivated to address it somehow, to preserve the client relationship.

But it sounds a little screwy to me.

They need to know "what kind of work" you did for him?

You provided professional services. You certainly weren't "working" for him as an employee.

Did he also give them the name of his physician, his dentist, his attorney, and his veterinarian? What about his plumber, and the neighborhood kid who cuts his grass?

All of which comes back to my first question: Who, or what, is USIA?

Google search comes up with a federal agency that ceased to exist in 1999.

I would be very, very careful with this. Caller ID doesn't prove that anything is legitimate.

BMK

[oceanlovin'ea]

U S I A - according to Wikipedia it is United States Information Agency.

oh, I didn't read all of the post before I responded. It does say it existed until 1999.

So what's with that?

Linda, EA

[Roland Slugg]

Third, if I decide to write off the debt do I have the right to issue him a 1099-C?

Did you also loan your "deatbeat" client some money? If you did, and if you are in the business of lending money, and if he didn't pay you back and won't pay you back, and if the amount was $600 or more, then yes, you should issue a 1099-C. You might want to read the instructions for form 1099-C.

[Y2KEA]

I would tell them, without any type of acknowledgement as to the client, that all requests must be submitted in writing through the USPS.

If you get that then I would do the following:

1. Tell them before you answer, they will need to provide a 7216 release before you can make a determination as to whether or not they are a client.

2. If you then determine the release is valid & they are a client, tell them you will not release any info if the account is not current.

3. A 1099C is for banks & lenders. I would use a 1099MISC with the amount in box 3. Assuming, of course, I would want to get involved in that can of worms.

[Gary]

Security Clearance

In order to get my security clearance, the FBI did background checks of people I knew and they did it in person. I don't know if things have changed in the last 25 years, but I would be suspect.

[Bonnie]

Sounds fishy. Maybe they are trying to get information they are not authorized

[RitaB]

Wait, what?

I did a little research, and I don't believe erchess is prohibited from issuing a 1099-C. I don't believe a 1099-Misc would be appropriate. I personally wouldn't do either.

http://www.unclefed.com/ForTaxProfs/irs-wd/1998/1998-020.pdf

I enjoyed this article, except when he said he was "to nice." I pictured a sign with an arrow pointing in the direction of "Nice." Then, he lost me with all that talk of collecting before you let your product out the door. Don't think I'll ever get there. Most people pay when they pick up. I can live with what I've lost by extending credit. It's not "to" much.

http://themotaxguy.com/blog/form-1099c-who-can-use-it/

[S T]

Rita B, good info - often wondered if we could issue a 1099-C - we are as tax prof a trade/business, and we do extend "credit" or payment arrangements to some clients???

Hmmm?

Sandy

[geekgirldany]

USIA no longer exists. It was merged into the State Department back in 1999 and its new name is Broadcasting Board of Governors.

Did you google the phone number? When I am in doubt about who is calling, I always google the number. I was getting several calls from the Better Business Bureau saying I had bad ratings. I did not and found out this was a telemarketing company even though Caller ID said Better Business Bureau.

Just does not sound right to me. I would just tell her that any clients must contact you first to sign a release and leave it at that. You can just ignore it also.

[tpnl]

Would not give any information

Our office would not give any information either. If the client wants you to release the information, then they would pay the bill. If they didn't pay, I would require the physical presence of the client before releasing any information (and I would only give them their original documents back if they didn't settle the bill). If I don't get paid, I am not a "paid preparer" so no copies of the return would be released.

We only have a very few LONG time clients that we will even file a return for if they don't pay their bill when the return is done.

[ChEAr$]

AGree. I would simply ignored any voicemail ( I dont' use it anyway.) or telephone calls, without of course giving any reason.

But I would never make up a 1099C no matter how much a former client owed. I consider that unprofessional. Resorting to a commercial collection agency or even using small claims court is more efficient.

[erchess]

USIS not USIA

I got the name wrong it's USIS not USIA.

I did all of his returns at one time then did a call to the IRS then did the collection information statement then more calls and finally had an IA he felt he could live with. At that time I did the work and then billed. I have since learned to get the money up front from late filers. There used to be an ad with the tag live and learn and then get luvs. Well so far I don't need luvs but I have had to live and learn.

[Koss]

Usis

Okay, USIS is a federal contractor. It's probably legitimate.

I still say you're not required to respond at all. And without knowing exactly how the release is worded, I can't say what I would do. You probably need to get a more specific 7216 release.

You could send a simple collection letter to the client, saying something like this:

- - -
We have received an inquiry from USIS, requesting information about you in connection with a background investigation. Please be advised that we are unable to respond to their inquiry until you sign and return the enclosed authorization, and satisfy your outstanding balance of $xxx.xx.
- - -


BMK

[RitaB]

This may be

Okay, USIS is a federal contractor.

You could send a simple collection letter to the client, saying something like this:

- - -
We have received an inquiry from USIS, requesting information about you in connection with a background investigation. Please be advised that we are unable to respond to their inquiry until you sign and return the enclosed authorization, and satisfy your outstanding balance of $xxx.xx.
- - -

BMK

This may be a blessing disguise, erchess, he may just pay up!

I use ATX. I am ready for some blessings that are not in disguise.