1099's and missing SS#'s

[JoshinNC]

How should I procede? My client (masonry contractor) has provided cancelled checks written to 1099 sub's and bank statements to support payments, but SS#'s are not available for about half. How do we file the 1099's, or do we file them without the info. I think they will be subject to penalty if SS# is not reported, right?

What a mess!

[sandysea]

50.00 penalty each

Yes, for failure to provide the information, your client will be subject to a penalty for each missing SS#....another reason that people should not write the check until they have valid documentation...if these are subs...I am sure they present insurance certs or something to protect the contractor, why not also ask for SS card at time of other documentation?

Only other option will be not to file the 1099's for them, but of course this would be income to the contractor....maybe the payment of penalties will convince him to do it right from now on

[JoshinNC]

I am learning more

These are "subs", not real subs. Basically, the owner "didn't know" he couldn't pay them as subs and, of course, they were happy to recieve pay with no taxes taken out. So, now the "subs" have disappeared and the owner can't come up with required info. I have told him that they are really employees, not subs, but he is not inclined to do payroll for them.

Should I get tough now, and tell them do payroll or find a new accountant?

[OldJack]

Should I get tough now, and tell them do payroll or find a new accountant?

You should document your discussion with the client advising him that he is required to issue 1099s and that if he wants you to prepare 1099s for those that he has SS#s for you will do so. Your documentation should show that he understood that there would be penalties, if audited, for not issuing 1099s. However, you should tell him you will not prepare 1099s for those that he does not have SS#s for, but you will take a business deduction for all the payments as he has shown proof that he actually incurred the expense. There is no reason for you to "get tough" and declare they were employees as it is not your problem, your business, or your decision.

[JoshinNC]

Thanks Jack

I didn't want to come down as a hard**s on them. I think this is a good resolution and covers my rear down the road.