contract-law tax-law
Make check payble to contractor or contractor&#39;s firm?
<p>Our condo association wants to hire a local firm to clean our gutters. The contractor wants the check made payable to him personally, like "George Washington", instead of his firm "George's Gutter Cleaning Corp".</p>

<p>His certificate of insurance states "George's Gutter Cleaning Corp.", I wrote his firm name in the agreement, and his Angie's List entry shows his firm name.</p>

<p>I'm thinking he's trying to avoid paying taxes on the income.</p>

<p>Could the association get into trouble by the IRS if we make check payable to him personally?</p>

<p>Thanks,</p>

<p>Ed</p>

<p>Not sure about any other issues, but if you pay him personally and the cost is over $600, you'll have to file a <a href="https://www.irs.gov/uac/about-form-1099misc" rel="nofollow noreferrer">1099-MISC</a> reporting the payment.  So he probably won't get away with avoiding taxes, but it would make more work for you.  If you pay his corporation, you probably don't have to file.</p>

<p>I think the penalty for totally not filing form 1099-MISC is minimally $530 this year, with no maximum, given this <a href="https://www.irs.gov/government-entities/federal-state-local-governments/increase-in-information-return-penalties-2" rel="nofollow noreferrer">chart of penalties</a>. <a href="https://www.irs.gov/pub/irs-pdf/i1099gi.pdf" rel="nofollow noreferrer">This booklet</a> spells out the details of their various classes of non-filing penalties and other consequences. If you eventually file the form, the penalty is less.</p>

<p>I spoke with my bookkeeper about this. She said we (the condo association) should request a W-9 from him and any and all other firms we do business with. The gutter cleaning guy can put down his corp name or his personal name on the W-9 including TIN or SSN.</p>

<p>Then the bookkeeper would generate a 1099 at the end of the year.</p>

<p>Otherwise, the IRS could penalize us. And yes he's trying to earn more income by not paying taxes.</p>

<p>I've requested the W-9. We'll see if he fills it out.</p>

<p>Thanks, Ed</p>
