Potential Mess

[ILLMAS]

Just wondering if this would cause a mess with self-employment tax? I've been doing TP return for about 3 years, she is self-employed, one of the church she does work for requested for her to get FEIN if she wants to continue working with them, as a result of notice the IRS sent the church. TP called to let me know she had applied for a FEIN about 20+ years ago, I called the IRS and they found no record of a FEIN issued to her. It turns out the FEIN was issued under the husband name, now here is the issue, if the FEIN is tied to the husband SS#, but the wife is the one who runs the business, how can I report SE income/expenses under the wife SS# when the 1099 will be issued to the husband? Would it be best just to apply for a new FEIN under the wife SS# and avoid all this mess?

[GeneInAlabama]

She cannot use her husband's FEIN. She will have to apply for her own.

[jainen]

>>Would it be best just to apply for a new FEIN under the wife SS# and avoid all this mess?<<

Best? Practical maybe, but you would miss out on all the fun of conquering the IRS automatic match system, not to mention the angry husband. By the way, you might ask the church what exactly they need, because SSN is a perfectly good tax ID number for the W-9.. Lots of places that have had problems will only contract with corporations these days.

[Margaret CPA in OH]

And when she gets her own, if the 1099 is issued in her husband's FEIN (although there is surely time to correct that for 2012), you can always include the income on her Sch. C (or appropriate business form) and state that it was reported under xx-xxxxxx. The reverse goes on his return.

How have you reported this for the previous years?

[ILLMAS]

"By the way, you might ask the church what exactly they need, because SSN is a perfectly good tax ID number for the W-9.. "

Here is the scope, TP is using a assumed name and using her SS#, the church recieved a "no-match" letter informing them the assumed name and SS# don't match, since the church has been paying under the assumed name, now the church wants a W-9 with the assumed name and a FEIN. I know the church can just issue the 1099 under her name and SS# and this will solve everything, but the church simply wants to cover themselves.

[Jack from Ohio]

^{The church needs a better informed accountant.}

^{Send the church a W-9. Nothing else is needed.}

[kcjenkins]

No one is 'wrong', but if it was me I would get her her own EIN and report it on her Sch C. Removing future problems.

[jainen]

>>the church wants a W-9 with the assumed name and a FEIN<<

Obviously--her own SSN only goes with her own name. Back in the good ol' days it was different. It only takes 5 minutes on-line, so what's the big deal anyway?

[JohnH]

I agree.

Get her FEIN online and use it on the W-9.

Jack correctly pointed out that the church is misinformed, but I woudn't trust them with her Social Security Number on the W-9.

I don't think you have a big mess.

The church probably got a mismatch notice on the 1099 because the name and the FEIN don't match. They're worried because there's all this verbiage about backup withholding, etc. The letter is pretty intimidating to an inexperienced reader, especially the stuff about what you can & can't do. They know from the letter that name and FEIN will solve the problem so they're asking for a new W-9. That's probably all they know and they don't have the expertise to investigate further. You could try and educate them, but it would be simpler and faster to just get the FEIN and submit the new W-9 (you're going to have to do that last part anyhow)

You've reported her income on Schedule C in her name & SS#, so she's getting proper credit for her earnings. The only issue is the AUR letters for the 1099 forms issued under the husband's FEIN, and that only affects 2009, 2010 and 2011 at the most - everything prior is a closed year. So you may have some correspondence to do if your client gets the AUR notices for any or all of those three years. The same letter will work for all years - just change the dates and amounts. Part of your explanation will be that you've obtained the FEIN in the proper name and a promise that it won't happen again.

You're done.