Yesterday, all brokers were required to issue 1099’s to anyone they paid more than $600 (when needed – link to article we wrote in December with details, call your accountant if you missed it). The process has been interesting, to say the least, based on the number of calls we received at the Board Office this week. A few helpful tips to start the year off right.
Get the W-9 Signed BEFORE: First, it is a best practice for every broker to have a W-9 form filled out before handing over a check more than $600, unless to a known CORP. Otherwise, get the form signed while you still have leverage (the check)! Send the blank form in advance of a closing to the cooperating brokerage so they can make sure to have it at the closing. And know you should expect to be asked for this form if you’re receiving money, and provide it in a timely manner… or stop whining about not getting your check. Oh, snap.
Don’t Try to Duck Responsibility: Secondly, Mike Shepard wants to remind you when attorneys issue commission checks ON YOUR BEHALF at closing, they are not obligated to issue a 1099 – that reporting requirement stays with the broker who owed and authorized payment of the money, even if they didn’t physically write the check. (and if you don’t like that answer, call Mike 😉
Keep it safe: Third, do NOT, for the love of all that is good, ask for someone to send a W-9 via email. It doesn’t pass the sniff test or the wisp test (Massachusetts’s Written Information Security Protocol WISP Act). The information on this form contains both names and social security numbers or corp tax numbers – making it the perfect lil document for identity theft. Email is not secure (so stop sending us your credit card info that way too, by the way ;-)) and make sure to remember that anything with a simple name + account number means you have an obligation to safeguard it or be subject to fines starting at $10,000. Fer real. And lock the dang forms in a file cabinet when you get them. Thank you. You can take our Safety Webinar to learn a little more!
No number, no worries: (it’s a pain, but no need to stress about it) Fifth, if you discover you didn’t get the W-9 or don’t have the Social Security number or TIN (Tax ID), make sure you formally request it no later than 12/31 of the year. To maintain compliance with IRS guidelines, you must make a formal request to the subcontractor for the identification number, before the end of the year. If you still don’t have it by the time to need to file the 1099-MISC at the end of January, you should leave the identification number box empty, but still submit the report to the IRS. The IRS will send a notice stating that the number is missing. This notice must be sent along with a W-9 form to the subcontractor. They will be subject to a penalty for failure to furnish the Social Security number to you, but you will have covered your assets.
Whoopsie: Ouch. Sixth, (wow, a lot came in on this subject this week), if the TIN number of a firm is not valid the IRS will reach out an tell you how to handle the situation. And when filling our your own W-9’s remember that you are signing “under the pains and penalties of perjury [yada yada] that the number is correct”. And the IRS brings pain and penalties, so take an extra sec to make sure it’s right – or fill one out, copy it a bunch of times and pre-sign them for easy delivery.
Hope that helps!