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On a defaulted surety bond who issues the 1099 to employees…

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On a defaulted surety...

On a defaulted surety bond who issues the 1099 to employees the bond company or the contractor

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

The bond company had to pay the employees on a defaulted bond who must issue the 1099 the surety company or the bond company

Accountant's Assistant: Is there anything else important you think the Accountant should know?

Who is resposible for the 1099

Submitted: 2 months ago.Category: Tax
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12/20/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago

Based on the following information, though not directly stated, it appears that the Surety Bond Company will issue the 1099s. SEE BELOW:

------------------------------------------

Once the surety's obligations have matured and it has gotten involved, it will first assess the situation and launch an 'investigation'. In these investigations, the surety always considers your best interest as well as that of the claimant (the project owner or subcontractor).

Therefore, if you happen to run into difficulties or have a claim filed against your bond, your best friend is your surety and you should immediately contact them and work together on resolving the issue.

If the surety finds you (the bond's principal) to have defaulted, and that there are valid grounds for a claim against your bond, it will take action.

Depending on the particular situation, sureties have a number of possible approaches to a potential or already occurred contractor default. There are four primary approaches to such a situation, though a surety will usually try to avoid contractor default if notified on time.

If it can't be helped and a contractor defaults, sureties usually follow one of the following courses of action:

  • Take over
  • Tender
  • Contractor assistance
  • Obligee completion

REFERENCE SOURCE:

https://www.forconstructionpros.com/business/business-services/article/12136729/how-surety-bonds-work-in-case-of-construction-contractor-default

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Tax Professional: Tax.appeal.168, Tax Accountant replied 2 months ago

While it does appear that the surety bond company should issue the 1099s, this may not always be the case. Based on my understanding of the previous information forwarded to you, the surety bond company may require that the contractor issue the 1099s. As there is no definitive answer to this question, this is something that you should address with the surety bond company.

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