Taxpayer asks:
Aloha
I am a bookkeeper for a small company. My boss wrote a check to a restaurant for preparing food for our Christmas party and it was over the amount for a 1099. I faxed a W-9 that week and have never heard a word. We just found out that the restaurant closed its doors and went out of business within the next 2 days of when we had our party. As a result I have no address or EIN number. How do I handle the 1099?
Taxgirl says:
I would handle a form 1099 for an out of business company exactly as if the company were still in business.
With respect to the EIN, I would mail (not fax) by certified mail and by regular mail a copy of the form W-9 to the last known mailing address, and make the request for the taxpayer ID number. If the taxpayer does not respond, I would issue the form 1099 with the word “refused” typed into the box and mail to the last known mailing address. Note that penalties may apply to both the taxpayer and the issuer.
With respect to the address, hopefully the business has arranged to forward its mailing address. You aren’t required to be a detective or chase a closed business down – the business has a responsibility to wrap up its affairs properly.
All of that said, I’m not sure why you need to issue a 1099 for the restaurant in this case. Forms 1099 are usually issued to individuals or partnerships, not corporations, with a few exceptions – read my prior post about it here.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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1099’s are an interesting issue. One must always reconcile any 1099 received on their tax return. The question that comes up on occasion is what do you do when someone issues a 1099 to you in error, such as the payment of monies to you when those monies are not taxable, such as a law firm, that does not normally handle personal injury cases, issuing a 1099 for payment of pain and suffering damages from a settlement of a claim or lawsuit.