Incorrect SSN on Brokerage Account

[S T]

Client transacted some "lost shares" in 2013 through Brokerage account that has migrated/merged from several Brokerage Firms merging. Old account was established over 30 years ago. Brokerage withheld Federal and State Income Tax. Client no longers has an account relationship with the Brokerage Firm.

Received the 2013 Year End Statement, and the correct name is on the Statement, but the wrong SSN is on the account, Client or myself do not know who it belongs to

Contacted the Brokerage advised we needed a corrected statement, completed a W-9 form.

Brokerage is advising that they can not correct the SSN#, as they have no paperwork establishing the SSN for when the transaction took place in 2013, using what is in their computer from prior account history.

This makes no sense! If the Brokerage firm will not correct the Tax Reporting, how are we to report the transaction on the tax form(Capital Gain) and claim the withholding for Federal and State Taxes withheld? Nothing will match in the Computer Systems at IRS or State.

Thanks for any suggestions, if you have encountered this issue.

Sandy

[Burke]

If they do not correct the 1099, your client will not be able to use the withholding as a credit on his tax return. I once had this situation with a 1099R. Correct name, wrong SSN. IRS told me the payor had two choices: correct the 1099 and send corrected copy to IRS & taxpayer, or refund the taxes and adjust their next reporting document. I advised them of this by letter, (getting to the correct party is one of the problems -- its the tax dept of a corporate entity), and they elected to send a corrected 1099. You can advise them that you will report their refusal to issue a corrected form to the IRS.

[FEDUKE404]

Plan B

Assume you already went this route:

Have the client prepare/sign a new Form W-9 ( using http://www.irs.gov/pub/irs-pdf/fw9.pdf which is a fill-in form that can be saved/printed ) and present it to the payer along with a request for a corrected Form 1099.

FWIW: Perhaps the "wrong" SSN belonged to a spouse, or a parent, or some other owner of a joint account?? Lots of things can happen in thirty years. . . .

If the brokerage firm is going to stand its ground ("we used what we had") it may be simpler for all parties to file the relevant tax event information on the client's tax return, but do NOT claim any federal/state income tax withholding. Then tell the firm to return those funds directly into the client's account once all the dust has settled.

Otherwise, just hunker down and plan a long battle waiting for a resolution, hopefully prior to 10/15/2014.

Something does not quite pass the smell test here, though. Is it possible this "problem" is more than just a 2013 tax year event? How did the client NOT know what was in the account? How did the firm NOT ask for a signed Form W-9 upon receipt of the account from wherever it had been before?

Oh yes: Whoever is the REAL owner of the reported SSN is likely in for a serious surprise somewhere down the road. . .

FE

[S T]

Burke - thanks for the info,

I do not believe the Taxpayer is going to pursue the Withholding amounts, or the correction on the Account - The Brokerage Account wants T/p to sign all kinds of paperwork, with Account Relationships, agreeing to Fees, Arbitration, etc. Like the Brokerage Service is back paddling to CYA themselves. We have already via Rep talked with the Tax Dept at the Brokerage.

T/p is "paranoid" about a "sleeping dog" on an old transaction on this account, and so far his dealings with the Brokerage have not been optimal.

It is a $ 645 Capital Gain transaction, even though it has $ 180 for fed withholding and $ 45 for State withholding.

Guess those amounts will just go in the "unclaimed coffers" to assist in paying of the Natl Debt one of these days

As long as I report the sale on T/P return to acknowledge, and do not take credit for the withholding, T/p acknowledged the transaction - even thogh the reporting from the Brokerage is going to some one elses SSN

And at some point maybe IRS or State will notify us if by a "miracle" they link the SSN's

FE - Yes you pretty much outlined what we have been through - SSN's do not belong to either the T/p or the Ex-Spouse listed on the account. And the account was a migration from another Brokerage firm initiated 32 years ago. Shares were inherited from a parent - but parent never had a SSN# - resided in a foreign country - I have seen the paperwork, so not makes a lot of sense for the inaccuracy of SSN

T/p had thought the account was totallyliquidated, until the contact from the current Brokerage account, advising there were some "lost shares" -and wanted them off the "books"

Brokerage - just this week, asked for a W-9 form (after the fact) As I stated above - not a lot of $$, and not worth maybe all of the effort

I will advise the client (something I had thought about) to have the Brokerage firm return the withholding to him - however, I do not believe the client is going to make the request -

I can only provide the knowledge I have and that you and Burke have provided

Thanks

Sandy