New client came in. Paid > $600 for services to a nonincorporated entity during 2005. Didn't get EIN. Dispute over services arose, client trying to get fees refunded from entity. Probably will not happen. Law enforcement is involved. My question is what do I do about the 1099 reporting? I've instructed the client in future not to pay with out EIN. Am I better to not report this amount? Or ??
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Worst Case
If it's not reported on the 1099 the worst thing that could happen is you could be penalized for not filing the 1099MISC which I think is $50/form. Not sure about the state consequences.
I try to get my clients to have the W-9 filled out before any money is paid to subcontractors. This also protects them from any backup w/holding.
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