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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22754
Experience:  Taxes, Immigration, Labor Relations
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I need to issue a 1099 but do not have the employees SS# XXXXX

Customer Question

I need to issue a 1099 but do not have the employees SS# XXXXX mailing address. What do I do?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
You will not be able to issue 1099MISC form without proper information.
You need to obtain such information before making any payments.
Your only option is to contact payees and request their names, addresses and tax IDs.
If you already made payments - the risk is that in case on audit - your deduction of such payments could be disallowed and you will be assessed a penalty for not issuing forms 1009MISC before the deadline.

Customer :

the circumstance is this, I funded loaned money to a contractor to pay his employees, my mistake was when he asked for any money I would simply pay whomever the contractor directed me too. now i'm stuck holding the bag to issue the 1099's? what if I don't issue them?

Customer :

what is the penalty for not issueing 1099's

Customer :

I have been requesting the personal information from the General contractor of course with no luck?

Customer :

Maybe I should just 1099 the GC and let them be responsible, is that legal?

LEV :

If you are required to issue and do not issue the form 1099MISC - the penalty is $50 per form.
However that might be larger issue if you deduct payments and these deduction would be disallowed cause you would not be able to proof facts of payments.

LEV :

If you have a general contractor - and payments were made to the general contractor - then teh form 1099MICS shoudl be issued to the general contractor.

Customer :

I have all my banking monthly statements that reflect all the payments I am referring too.

LEV :

Having banking monthly statements and other documents might be used to defend your position in cased of the audit. That definitely would be better if you were not having any documents - but still your deductions might be disallowed - and you might have hard time with the IRS if audited.

Customer :

The company who had the direct contract to do the work paid cash and straight checks to some persons working, and my company who was lending cash to the project but not under contract only verbal agreement. I just want to do the right thing. I did not have the contract with the GC only the sub of the GC and it was verbal. I am willing to issue 1099's but cannot get the pertinent information that I need. I am so confused, I didn't know I was liable to issue the 1099's but most of the cheks were from my company not the company that was contracted out to do the work?

Customer :

So if the other company is taking the deductions then they should issue the 1099*'s right even though I have record of the disbursements?

Customer :

Really all I should have been doing was lending cash to the construction company who was originally contracted out. This way the monies would have been considered a loan specifically....correct?

Customer :

are you still there?

LEV :

The verbal agreement is still considered as a contract - and may hold in the court. However there might be harder to proof any specific terms.
Also - that makes no difference if payments were made in cash or with checks - as long as teh fact of payments is not objected.

Customer :

ok so then i could say it was truely a loan, and the original contract would be responsible for the 1099's?

Customer :

Just want to determine what company is to issue the 1099's. Especially since I DON'T have the personal information

LEV :

If you provided a loan - that was expected to be paid back - that is not a payment. The loan is not taxable for the recipient and not deductible for the payer. The loan is NOT reported on form 1099MISC.
However you need to be clear if that is a loan which will be paid back OR that was a payment for services.

Customer :

The loan are all the payments made to individuals and for equipment etc..... in other words most the cash came from me but to pay debt for the Gen. Contractor that was hired

Customer :

The monies mostly was used for reimbursements of receipts turned in.

LEV :

If the money were intended to be used reimbursements of receipts - that is NOT a loan.
The loan is when the money are expected to be paid back.

Customer :

The GC would compile the receipts ask me for a loan for the amount of receipts. We would issue the payments. But all the AR was receipted by the General Contractor. I never received any payments for the job?

Customer :

glad you are back,

Customer :

I was only asked to FUND the project, boy if I would have known all of this I would NEVER have done it

LEV :

reimbursements of receipts are not loans - because these money are not expected to be paid back. These are payments for services or goods provided.
You may not simply called these loans - if you will never receive the money back.

LEV :

All payments you made in the course of your business activity to the general contractor - you need to report on 1099MISC. If the general contractor paid to subcontractors - that is his responsibility.

Expert:  Lev replied 1 year ago.
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Expert:  Lev replied 1 year ago.
Just in case you were not able to use the chat - I am switching to Q&A mode and porting the answer below.
Please feel free to communicate if you need any clarification or have other tax related issues.

reimbursements of receipts are not loans - because these money are not expected to be paid back. These are payments for services or goods provided.
You may not simply called these loans - if you will never receive the money back.
All payments you made in the course of your business activity to the general contractor - you need to report on 1099MISC. If the general contractor paid to subcontractors - that is his responsibility.

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