question Why would a buyer require a 1099?

[WhoaDomain.com]

I have this "deal" for $1000. This is the first time I was ever asked to fill out a 1099 form. Is this some slick way to F me over? isn't a 1099 like a form stating I do some work for someone?

What is the benefit to the buyer for me to fill this out and submit it?
Or is there a benefit for me too?

something fishy about all this. Already signed an agreement with them to sell the domain so they would just send me a check after the domain is transferred but I hesitate filling this 1099 out just because it's not typical.

It makes me want to just cancel this deal and just do it the regular channels via Escrow or Escrow site.

I have this feeling since I squatted on a domain they needed that they are trying to pull a fast one.

or is this sort of thing normal?

 

[offthehandle]

. And then if the buyer of the goods chooses to issue a 1099 that’s up to him.

I should have said that earlier. May or may not, very true its not every company. My accountant stated often organizations who have been audited previously would commonly issue them regardless as a CYA effort, and of course large corporations many did. My accountants never asked for them when preparing taxes, I never ever was audited, never needed one but always declared the income because at the end of the year, you count invoices anyway, not a stack of 1099’s as they would never include all income. You can only be accurate by referring to only your invoices or bank deposits, matching them up to purchase orders. If I wholesaled out inventory to my resellers or mfg reps at discount, I never issued a 1099 because it was physical goods. If I wrote them a sales commission check though they needed to provide a W9, if they didn’t then that was a noncompliance problem.

Had I on the other hand been in a different business and subcontracted large sums of “service work” to be done outsourced to independent contractors not incorporated or sole proprietors sure it would have been adviseable, but if I had issued them a PO and they sent me an invoice which we paid, then what’s the point of it? Its documented, and can audited based on PO, invoice and bank deposit and xerox copy of the check as was standard practice for us.

Shouldn’t OP simply send a W9, what’s the point of arguing? I have never refused. In order to do domain resales and set up accounts with registrars its required to provide a TIN or SSA, why should it be any different with an end user?

The UDRP concern is unwarranted if the buyer really wants your information. This is because all registrant information becomes unmasked, unredacted so your information will be discovered when its filed. So by refusing to file the W9 you are just making life more difficult for your buyer.

However, this prospective buyer OP mentions evidently isn’t too smart about tax laws asking a seller for a 1099 and should be instead doing formal business and issuing a formal PO and attached a W9 to the seller (OP) for him to return completed, along with an invoice.

 

[topdom]

Tell them, you are not comfortable doing this type of thing, and suggest that you use a standard way to complete this transaction. To be less polite you can say, you avoid such things because there is identity theft possibility, probably not in this case, but you are not willing to make an exception anyway. You can also lie and say, there is another offer.

 

[Brian L.]

A 1099 doesn’t really make sense for a domain purchase. I would definitely advise against giving them a social security number for a 1099. Do you have a US business tax ID?

 

[WhoaDomain.com]

Are you sure they didn't ask you to sign a W-9?


If a Corporation Refuses to File Form W-9
One way some people try to avoid paying taxes on income is to not provide a Form W-9 when requested. This violates IRS regulations. The paying company needs to make an effort to get the EIN information to properly complete the Form 1099-MISC. If it cannot do so, it completes the form without it.

"Not provided" is printed in the box where the EIN normally appears. This lets the IRS know that the company tried to obtain the information and wasn't successful.

The payer then has the option to continue to work with the vendor only under the condition that all payments are subject to backup withholding, meaning the corporation doing the work is paid the agreed upon amount less the applicable taxes. If the vendor corporation wants to regain any of those funds, it needs to clarify all tax matters and provide the payer with the correct information.

https://smallbusiness.chron.com/corporations-issued-1099s-56474.html

No the lawyer said 1099.

A 1099 doesn’t really make sense for a domain purchase. I would definitely advise against giving them a social security number for a 1099. Do you have a US business tax ID?

yes I have an EIN. Employer identification number. it was what I planned to send them.

 

[WhoaDomain.com]

I should have said that earlier. May or may not, very true its not every company. My accountant stated often organizations who have been audited previously would commonly issue them regardless as a CYA effort, and of course large corporations many did. My accountants never asked for them when preparing taxes, I never ever was audited, never needed one but always declared the income because at the end of the year, you count invoices anyway, not a stack of 1099’s as they would never include all income. You can only be accurate by referring to only your invoices or bank deposits, matching them up to purchase orders. If I wholesaled out inventory to my resellers or mfg reps at discount, I never issued a 1099 because it was physical goods. If I wrote them a sales commission check though they needed to provide a W9, if they didn’t then that was a noncompliance problem.

Had I on the other hand been in a different business and subcontracted large sums of “service work” to be done outsourced to independent contractors not incorporated or sole proprietors sure it would have been adviseable, but if I had issued them a PO and they sent me an invoice which we paid, then what’s the point of it? Its documented, and can audited based on PO, invoice and bank deposit and xerox copy of the check as was standard practice for us.

Shouldn’t OP simply send a W9, what’s the point of arguing? I have never refused. In order to do domain resales and set up accounts with registrars its required to provide a TIN or SSA, why should it be any different with an end user?

The UDRP concern is unwarranted if the buyer really wants your information. This is because all registrant information becomes unmasked, unredacted so your information will be discovered when its filed. So by refusing to file the W9 you are just making life more difficult for your buyer.

However, this prospective buyer OP mentions evidently isn’t too smart about tax laws asking a seller for a 1099 and should be instead doing formal business and issuing a formal PO and attached a W9 to the seller (OP) for him to return completed, along with an invoice.

the person I'm dealing with is the lawyer who originally was sent to me for Udrp.

I think this lawyer isn't familiar with these things? or is that a bit of a stretch?

he should know right ?

after explaining it. he said just send over the W-9.

 

[WhoaDomain.com]

Tell them, you are not comfortable doing this type of thing, and suggest that you use a standard way to complete this transaction. To be less polite you can say, you avoid such things because there is identity theft possibility, probably not in this case, but you are not willing to make an exception anyway. You can also lie and say, there is another offer.

I like this. never thought of the idea of identity theft.

hmmmm. starting to think now this should be done via an escrow.com or sedo escrow.

 

[WhoaDomain.com]

to wrap this up going to send the lawyer a W-9.

done.

 

[Internet.Domains]

@Avtar629 You should really check with a CPA. By filing a 1099 you will be paying income tax vs. capital gains. Due to income tax being progressive you may end up paying much more than needed.

Long term capital gains is, depending on your income, generally less than income tax.

Good luck!

 

[offthehandle]

I think this lawyer isn't familiar with these things? or is that a bit of a stretch?

I have heard that “l’m not an accountant” excuse from Lawyers before, most likely not a business person themselves, a partner in a firm, never ran their own business, etc. I posted the IRS link above, you might send that with your EIN number to the lawyer to educate them. If you argue it, it just taints the transaction, refusing to provide it only makes you look bad. I wouldn’t worry about ID theft with sending this via a scanned document to a Lawyer. Using Escrow Concierge wouldn’t hurt, I’d request the customer pay for it.

@Avtar629 You should really check with a CPA. By filing a 1099 you will be paying income tax vs. capital gains. Due to income tax being progressive you may end up paying much more than needed.

Long term capital gains is, depending on your income, generally less than income tax.

Good luck!

Sure, absolutely he should check with his CPA, remember he is being requested by a lawyer incorrectly to provide a 1099 not W9 for a tax payer ID. The manner in which he treats the transaction on his taxes next year has nothing to do with providing an EIN then receiving a 1099. The customer does not dictate sellers decision on tax treatment. As I said above, all my tax accountants ever want were income statements never once in 30 years cared about seeing 1099’s to prepare taxes as all income was by invoices, which OP should provide to his customer.

 

[Internet.Domains]

I

The customer does not dictate sellers decision on tax treatment.

By filing a 1099 the customer (buyer) is dictating how taxes are applied to both parties. The customer can deduct the funds straight off the top, while the seller is adding them straight on to the top.

What's even more consequential is that this sale, or let's call it income due to the 1099, can push capital gains into a higher bracket because of the income increase.

So that means that last sale of CoinMena at $25,000 is now possibly taxed at a higher rate. It could get ugly quickly. Best to consult a CPA and know your brackets.