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Hi, my name is*****'m an attorney and I feel your pain! Reference code 101 is generated when the IRS detects a potential name conflict. When a person creates a business entity such as an LLC, C or S corporation, etc., it's done on the state level. The Secretary of State will tell you if the name that the business owner has chosen is available. However: when you apply for an EIN for that business, the IRS doesn't distinguish by state. Although there are multiple references to the state of incorporation/creation on the EIN application, it remains possible and probable that the IRS may pick up a similar business in another state, so it's not unusual to receive a Reference 101. It just means that you have to submit the SS-4. You're fortunate that the IRS rep you got on the phone was able to clear the application. Many times they request copies of creation documents such as Articles, etc. In your case it looks like you'll be able to proceed with just the SS-4 via fax.
There are other reasons why an online application will fail, but your Reference Code 101 indicates a name conflict. For example: the IRS will not process an online EIN application if the responsible party is a business entity with its own EIN that was obtained online. Also, the IRS will only issue one EIN to a responsible party per day.
I'll be happy to answer this question. Give me a few minutes to do a bit of research so I can give you some authority for my response.
Okay. Some lawyers get confused over the ethics rules regarding association with non lawyers. In California, rule 1-310 simply states that "a member shall not form a partnership with a person who is not a lawyer if any of the activities of that partnership consist of the practice of law." But it's perfectly acceptable for a business entity to hire an attorney as an employee, pay the attorney a salary, and bill clients for the costs. That's pretty much the definition of "in house counsel" as seen in banks, insurance companies, large corporations, etc. Your in house attorney would handle all the legal matters.
Hope that clears it up for you. Thanks.
No problem! It's always gratifying to help some attorney somewhere obtain extra work! What you want to focus on is your relationship with the attorney. It may be employer/employee, or contractor/subcontractor. You just can't be partners. The law practice must be independent. Your clients pay you, and you pay your lawyer. You can hire an attorney and give him/her a W2 at the end of the year, or you can use an attorney on a contract basis and give them a 1099-MISC. Any reasonable fee structure should pass muster. Hourly, flat rate for specific services, etc.
To answer your questions specifically:
2) Your reference to 1099 I'm taking as a distinction between having the lawyer as an employee vs a subcontractor. Either way is fine.
I've found that an attorney in a tax controversy evironment is most helpful in preparing financial statements (433's), sorting out innocent/injured spouse claims, and resolving trust fund issues for those contractors who didn't pay over their payroll taxes.
I'm just outside of Santa Barbara, CA, city called Goleta. And I'm winding down the practice...trying to retire!!!
Just picked up your msg. I'm out of the country but will try to reach you tomorrow. Thanks!