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The Guy Behind the Tree
The Guy Behind the Tree, Experienced Investor & Financier
Category: Tax
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What if a person refuses to fill out a w-9 for rent paid to them

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Submitted: 8 years ago.
Category: Tax
Expert:  The Guy Behind the Tree replied 8 years ago.
Is this for rent of a personal residence or for rental of business property?
Customer: replied 8 years ago.
Reply to The Guy Behind the Tree's Post: personal residence paid by company on behalf of renter.
Expert:  The Guy Behind the Tree replied 8 years ago.
The company can still record the rent as an ordinary and necessary business expense. The canceled checks of the company provide all that is needed in this regard.

Without a W-9, the company does not know the taxpayer ID number of the recipient, and thus cannot prepare and submit meaningful tax forms. The submittal of a 1099, for example, without the taxpayer ID would be pointless. The company should note in its books and records the refusal of the recipient to complete a W-9.

There isn't much more to be done. Whether or not the recipient of the rental payments declares them as income is between the recipient and the IRS.
Customer: replied 8 years ago.
Reply to The Guy Behind the Tree's Post: So then the company would not report the refusal to the IRS?
Expert:  The Guy Behind the Tree replied 8 years ago.
Sadly, reporting tax cheats to the IRS isn't as satisfying as it should be. In this particular case, one can't be sure that the refusal involves tax cheating, only that the person is extremely sensitive about giving their taxpayer ID to anyone.

The IRS itself indicates it can take 12 to 24 months for an investigation to proceed to completion. During that time they will not give status reports to the whistleblower.

http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html

They will give preference to cases where larger dollar amounts are involved.

http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html

IF there is enough money involved, be assured that even though you don't hear anything, there is an investigation proceeding. In this case, it is unlikely that the IRS will act on the refusal of the person to provide the W-9 information.
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