Beneficiary refuses to give SS #.

Discussion in 'Tax' started by Nan, EA in LA, Jan 14, 2006.

  1. Client is executor/trustee and will file a 1041 with 5 K-1s
    for herself and siblings. One brother is a pain in the ____
    and refuses, among other things, to give his Social Security
    number. I am thinking we should just file the K-1 with a
    note to IRS that this person refuses to comply. Any other
    suggestions?

    Nan, EA in LA

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Nan, EA in LA, Jan 14, 2006
    #1
    1. Advertisements

  2. Nan, EA in LA <> wrote:

    > Client is executor/trustee and will file a 1041 with 5 K-1s
    > for herself and siblings. One brother is a pain in the ____
    > and refuses, among other things, to give his Social Security
    > number. I am thinking we should just file the K-1 with a
    > note to IRS that this person refuses to comply. Any other
    > suggestions?


    Can the distributions be held in escrow pending receipt of a
    W-9?

    __
    Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Arthur Kamlet, Jan 15, 2006
    #2
    1. Advertisements

  3. Nan, EA in LA

    Phil Marti Guest

    "Nan, EA in LA" <> wrote:

    > Client is executor/trustee and will file a 1041 with 5 K-1s
    > for herself and siblings. One brother is a pain in the ____
    > and refuses, among other things, to give his Social Security
    > number. I am thinking we should just file the K-1 with a
    > note to IRS that this person refuses to comply. Any other
    > suggestions?


    I'd send him a certified letter transmitting Form W-9 and
    asking for its prompt return. As I recall the W-9 explains
    legal requirements and backup withholding.

    I seem to recall that some payors are required to backup
    withhold if the payee refuses to provide a TIN. Be sure to
    check into that.

    --
    Phil Marti
    Clarksburg, MD

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Phil Marti, Jan 15, 2006
    #3
  4. Nan, EA in LA

    MTW Guest

    Nan, EA in LA wrote:

    > I am thinking we should just file the K-1 with a
    > note to IRS that this person refuses to comply. Any other
    > suggestions?


    Just thinking out loud... You ~might~ be required to
    implement backup withholding in a situation like this.

    MTW

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    MTW, Jan 15, 2006
    #4
  5. Nan, EA in LA

    Hank Murphy Guest

    If the anonymous son is under about 35, the client might be
    able to request a copy of the decedent's 1991 tax return.
    This is when the IRS first required SSNs for dependents
    IIRC.

    Hank Murphy
    speaking only for myself

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Hank Murphy, Jan 15, 2006
    #5
  6. "Nan, EA in LA" <> wrote:

    > Client is executor/trustee and will file a 1041 with 5 K-1s
    > for herself and siblings. One brother is a pain in the ____
    > and refuses, among other things, to give his Social Security
    > number. I am thinking we should just file the K-1 with a
    > note to IRS that this person refuses to comply. Any other
    > suggestions?


    There are requirements for backup withholding for someone
    who won't give his SS number. When you do that you'll issue
    a 1099 showing the distribution and the tax withheld. He
    can file a return to get it back.

    Stu

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Stuart A. Bronstein, Jan 15, 2006
    #6
  7. Nan, EA in LA

    Mark Rigotti Guest

    "Nan, EA in LA" <> wrote:

    Have you gone the W-9 route?????

    If so file without and wait for the IRS to mandate the 30%
    (I think) withholding on any distributions. With no tax
    number the individual will not be able to get the monies and
    you'll be able to have the last laugh.

    Regards,

    Mark

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Mark Rigotti, Jan 15, 2006
    #7
  8. Nan, EA in LA

    Gary Goodman Guest

    says...

    > If the anonymous son is under about 35, the client might be
    > able to request a copy of the decedent's 1991 tax return.
    > This is when the IRS first required SSNs for dependents
    > IIRC.


    I thought it was 1987 that the requirement for SSNs started
    to phase in.

    My read on the original question is that the money has
    already been distributed and the poster is ready to prepare
    K-1s.

    Gary

    --
    E-mail to the above address is rarely read. If you want to
    contact me directly, please send an e-mail to: gary at
    gdgoodman dot com.

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Gary Goodman, Jan 17, 2006
    #8
  9. "Nan, EA in LA" <> wrote:

    > Client is executor/trustee and will file a 1041 with 5 K-1s
    > for herself and siblings. One brother is a pain in the ____
    > and refuses, among other things, to give his Social Security
    > number. I am thinking we should just file the K-1 with a
    > note to IRS that this person refuses to comply. Any other
    > suggestions?


    Live ammunition.

    --
    David M. Woods, EA, ChFC, CLU
    Woods Financial Services
    Norwood, MA 02062
    www.woods-financial.com

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    David Woods, EA, ChFC, CLU, Jan 18, 2006
    #9
  10. Nan, EA in LA

    Ernie Klein Guest

    "Stuart A. Bronstein" <> wrote:
    > "Nan, EA in LA" <> wrote:


    >> Client is executor/trustee and will file a 1041 with 5 K-1s
    >> for herself and siblings. One brother is a pain in the ____
    >> and refuses, among other things, to give his Social Security
    >> number. I am thinking we should just file the K-1 with a
    >> note to IRS that this person refuses to comply. Any other
    >> suggestions?


    > There are requirements for backup withholding for someone
    > who won't give his SS number. When you do that you'll issue
    > a 1099 showing the distribution and the tax withheld. He
    > can file a return to get it back.


    I have read many responses to the question that (almost all)
    suggest backup withholding, but that assumes that the
    distribution is in the _future_. Maybe I am reading the
    question wrong, but the OP is asking about filing a K1 for
    an estate which is usually only done _after_ the
    distribution has been made.

    Maybe I am reading this wrong, but assuming I am correct
    (for the sake of argument), if all estate distributions have
    been made (i.e. no assets left in the estate at all --
    nothing to withhold), and all the estate is doing is filing
    after-the-fact paperwork (k-1's), then what should/can the
    estate do at this point?

    --
    -Ernie-

    "There are only two kinds of computer users -- those who have
    suffered a catastrophic hard drive failure, and those who will."
    Have you done your backup today?

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Ernie Klein, Jan 18, 2006
    #10
  11. Ernie Klein <> wrote:

    > Maybe I am reading this wrong, but assuming I am correct
    > (for the sake of argument), if all estate distributions have
    > been made (i.e. no assets left in the estate at all --
    > nothing to withhold), and all the estate is doing is filing
    > after-the-fact paperwork (k-1's), then what should/can the
    > estate do at this point?


    The executor should pray, because he could end up having to
    pay the taxes out of his own pocket.

    If the probate is still open he could apply for a court
    order requiring the beneficiary to turn over his social
    security number. But once the money's been distributed
    there's really little leverage.

    Stu

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Stuart A. Bronstein, Jan 19, 2006
    #11
  12. Nan, EA in LA

    Phil Marti Guest

    "Ernie Klein" <> wrote:

    > I have read many responses to the question that (almost all)
    > suggest backup withholding, but that assumes that the
    > distribution is in the _future_. Maybe I am reading the
    > question wrong, but the OP is asking about filing a K1 for
    > an estate which is usually only done _after_ the
    > distribution has been made.
    >
    > Maybe I am reading this wrong, but assuming I am correct
    > (for the sake of argument), if all estate distributions have
    > been made (i.e. no assets left in the estate at all --
    > nothing to withhold), and all the estate is doing is filing
    > after-the-fact paperwork (k-1's), then what should/can the
    > estate do at this point?


    IF backup withholding applies, it applies at the time of
    distribution and it's not the executor's choice whether or
    not to find out what his responsibilities are. If he can't
    get the TIN now that the train has left the station, perhaps
    he can collect whatever this is going to cost him from his
    legal advisor, who should have told him all his
    responsibilities.

    --
    Phil Marti
    Clarksburg, MD

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Phil Marti, Jan 19, 2006
    #12
  13. Nan, EA in LA

    Guest

    Nan, EA in LA wrote:

    > Client is executor/trustee and will file a 1041 with 5 K-1s
    > for herself and siblings. One brother is a pain in the ____
    > and refuses, among other things, to give his Social Security
    > number. I am thinking we should just file the K-1 with a
    > note to IRS that this person refuses to comply. Any other
    > suggestions?


    Despite the recommendations by several people to resort to
    backup withholding, doing so would be improper. Generally
    speaking, an irrevocable trust is not considered a payor for
    backup withholding purposes, so the backup withholding rules
    do not apply to irrevocable trusts (they do apply to grantor
    trusts, but that is not the situation in the poster's
    question). Reg 31.3406(h)-2(c).

    Your only real recourse is found in Code section 6109.
    Under that section, the beneficiary is obligated to provide
    you with his social security number, but there is no
    mechanism for the trustee to enforce the provision. If the
    beneficiary refuses to comply, the trustee is supposed to
    request the number from the beneficiary in writing,
    indicating that the beneficiary is required by law to
    furnish the number. Reg =A7 301.6109-1(c). If the
    beneficiary continues to provide the number, the trustee is
    supposed to include an affidavit with the trust's tax return
    indicating the fact that the trustee has requested the
    number in writing but that the beneficiary has refused to
    comply. Reg =A7 301.6109-1(c).

    If the trustee does not follow this procedure, filing the
    return with a missing social security number could result in
    penalties being imposed on the trustee for failing to file a
    correct payee statement under Code section 6722. The base
    penalty would be $50, but the penalty could be increased to
    the greater of $100 or 10% of the total of the icome shown
    on the K-1 if the IRS finds that there was an intentional
    disregard of the requirement to file an accurate payee
    statement.

    Under section 6109, the trust tax return is considered a
    separate return by each beneficiary for the beneficiary's
    portion of the income. If the trustee includes the required
    affidavit, presumably, the IRS would go after the
    beneficiary for the 6722 penalty. If the proper procedures
    were followed, the beneficiary should have been advised in
    writing that the social security number was required by law.
    In that case, it would be fairly easy for the IRS to allege
    an intentional disregard of the requirement to provide the
    social security number, so the beneficiary could very easily
    be looking at a penalty equal to the larger of $100 or 10%
    of the amount of income shown on the K-1.

    --Chris Ballard

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    , Jan 19, 2006
    #13
  14. I like David Woods suggestion. And I appreciate the other ones.

    However, my question was based on a frantic call from the
    client/executor whe had just had a nasty refusal from her
    sibling and I totally forgot to ask whether or not all the
    distributions had been made. I'll find out and let you
    know the next installment.

    Isn't tax season fun? An appointment was just made by the
    divorcing second spouse of an old client whose return I'm
    sure I'll do along with that of his first spouse and the
    married child of that first marriage. Fast note to the
    secretary - DO NOT SCHEDULE ANY OF THESE ON THE SAME DAY !

    Nan, EA in LA

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Nan, EA in LA, Jan 19, 2006
    #14
  15. Nan, EA in LA

    TaxmanHog Guest

    "Ernie Klein" <> wrote ............
    > Maybe I am reading this wrong, but assuming I am correct
    > (for the sake of argument), if all estate distributions have
    > been made (i.e. no assets left in the estate at all --
    > nothing to withhold), and all the estate is doing is filing
    > after-the-fact paperwork (k-1's), then what should/can the
    > estate do at this point?


    Provide an accurate NAME & ADDRESS of the recipient,
    IRS Entity Examiner will locate the SSN via IDRS NAME INDEX.

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    TaxmanHog, Jan 20, 2006
    #15
  16. Nan, EA in LA

    Phil Marti Guest

    "Nan, EA in LA" <> wrote:

    > Isn't tax season fun? An appointment was just made by the
    > divorcing second spouse of an old client whose return I'm
    > sure I'll do along with that of his first spouse and the
    > married child of that first marriage. Fast note to the
    > secretary - DO NOT SCHEDULE ANY OF THESE ON THE SAME DAY !


    Party pooper!

    --
    Phil Marti
    Clarksburg, MD

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    Phil Marti, Jan 20, 2006
    #16
  17. Nan, EA in LA

    MTW Guest

    wrote:

    > Despite the recommendations by several people to resort to
    > backup withholding, doing so would be improper. Generally
    > speaking, an irrevocable trust is not considered a payor for
    > backup withholding purposes, so the backup withholding rules
    > do not apply to irrevocable trusts (they do apply to grantor
    > trusts, but that is not the situation in the poster's
    > question). Reg 31.3406(h)-2(c).


    The original post states that the client is an
    EXECUTOR/trustee. I'm not sure that the rule you cite would
    apply to an ESTATE or to a trust that has been combined with
    an estate for administrative purposes under IRC 645. But,
    it's a good question. <grin>

    MTW

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2006) - All rights reserved. >>
    << ======================================================= >>
     
    MTW, Jan 20, 2006
    #17
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. Tripp Knightly
    Replies:
    46
    Views:
    2,185
    CLJ1219
    Aug 24, 2004
  2. Bill Gross
    Replies:
    0
    Views:
    261
    Bill Gross
    Jun 19, 2004
  3. Stewart Berman

    Quicken 2004 H&B Refuses Valid PIN

    Stewart Berman, Oct 26, 2004, in forum: Quicken
    Replies:
    3
    Views:
    227
    John Pollard
    Oct 26, 2004
  4. Mark J. Krisburg

    Quicken periodically refuses to open QDATA

    Mark J. Krisburg, Oct 29, 2004, in forum: Quicken
    Replies:
    1
    Views:
    632
    John Pollard
    Oct 29, 2004
  5. johnny dough

    IRA beneficiary of a beneficiary

    johnny dough, Feb 3, 2004, in forum: Financial Planning
    Replies:
    6
    Views:
    485
    Ed Zollars, CPA
    Feb 6, 2004
Loading...

Share This Page