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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Legal
Satisfied Customers: 17483
Experience:  B.A.; M.B.A.; J.D.
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I need to establish a merchant account to process credit

Customer Question

I need to establish a merchant account to process credit cards for my business and for personal reasons I can not set one up myself. My merchant provider said I can find another person such as a friend who will use their social security number and name ect to be the signatory account for my. The "friend will receive a 1099 since their social security number is ***** is on file. If I process $100k in the merchant account I would of course pay the taxes on it.Question is how do I account for everything with the IRS?
Does my friend need to do anything with the 1099 that they receive?
If so can they simply sign over the 1099 to me and not have to do anything?
Do they submit the 1099 to IRS with their tax return and I issue my friend a 1099 too?Ideally I'm looking for a situation where they don't have to do anything and I take care of all paperwork.
Submitted: 9 months ago.
Category: Legal
Expert:  Phillips Esq. replied 9 months ago.

I do not see how you can legally do this. Your "friend" would be on the hook as having received the income and must file tax return to account for the income. However, your friend would only attach the 1099 on her tax return if there were taxes withheld on the form.

Your friend CANNOT sign over the 1099 to you.

Customer: replied 9 months ago.
I've been told its been done MANY times...Could I invoice my friend who received the 1099 for the exact amount shown on 1099?i.e. If their 1099 shows $100k I invoice them $100k for XYZ. Not sure what the XYZ would be.
Expert:  Phillips Esq. replied 9 months ago.

I have nothing else to add to my initial response. So, I will opt out and give another Attorney the opportunity to further assist you.

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