1099-RENT to Issue or not to Issue

[Bird Legs]

Client, sole proprietor, Sched. C, has a barber shop.
Pays rent for the building.
Have been trying to obtain the owners SSN or FEIN.
Owner says that he refuses to furnish it and the rent does not need to be reported to
the IRS.
But, if it is, the renter will probably be looking for another shop to rent within 15
days of the issuance of the 1099 Misc.

Question: what do you do in this instance? I was planning on going ahead and
issuing the 1099 with no recipients SSN or FEIN reported.
But at what consequence to the client?

[Bees Knees]

Tell your client he can't deduct his rent unless he issues a 1099 to his landlord. Tell him it is not fair that the landlord gets to evade tax while he gets no deduction.

Your client might not be too anxious to cover up his landlord's tax evasion if it is going to cost him a tax deduction.

[Bees Knees]

Actually, my last post is not true, although it should be.

If a payee refuses to furnish a TIN, the payor is required to do backup withholding on all future payments until the payee furnishes a TIN. The backup withholding rate is 28%.

[OldJack]

Its not your job to issue or even prepare the 1099 unless the payer client wants you to do so. Maybe the owner is a corporation and a 1099 is not required. As a tax preparer you should stay out of the conflict.

[Bird Legs]

Old Jack-the

owner is an individual.
Would I be derelict in my duties to not prepare the 1099?
Maybe I should prepare them without the Payees SSN and then let the client
do whatever with it he wants.
As far as backup withholding, yes that should be done. However, the first time
it is withheld, the client is kicked out and the door is padlocked with all equipment
inside.

[Unregistered]

Do not send in a 1099 without the ID number... They will simply send you a letter asking for it and then "your back in the same boat". You have to put the responsiblity in the hands of the client, tell him in order to do the 1099 you need the SSN. If you do not get it, you can not prepare it and there is some exposure if its not done. The exposure is not just a $50 penalty but a denial of expense, etc. Good luck.

[Jesse]

Thinking out loud

Why would it be a denial of the expense?

I can understand the penalties for not filing the 1099 and the issue of backup w/holding, but it is still an ordinary and necessary expense and if you have receipts to provide proof of payment you should still be able to take the deduction.

[OldJack]

deduction has nothing to do with 1099 issue

it is still an ordinary and necessary expense and if you have receipts to provide proof of payment you should still be able to take the deduction.

I agree with Jesse.. It is a deductible expense regardless of a 1099 issued or not.