Discussion:REPORTING CASH PAYMENTS TO IRS

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Discussion Forum Index --> Tax Questions --> REPORTING CASH PAYMENTS TO IRS


DJBCPA (talk|edits) said:

12 September 2006
HOW DO I REPORT SOMEONE (A HOME REPAIR CONTRACTOR) TO THE IRS - HE INSISTS ON CASH PAYMENTS FOR HIS WORK?

Sandysea (talk|edits) said:

12 September 2006
Do you mean report his income or report him for non compliance??

DJBCPA (talk|edits) said:

12 September 2006
Report him for non compliance.

Sandysea (talk|edits) said:

12 September 2006
You can contact the fraud department with the Department of Justice. Double edged sword here....will he not give out his SSN or TIN in order to be compliant?

Taxref (talk|edits) said:

13 September 2006
I take it the repairs are for your personal residence, and consequently you do not have to issue a 1099. Anyone can insist on cash payment for their work, it only becomes illegal if not reported on a tax return. If you have problems with the work done or if you feel he is not licensed, you may have better luck dealing with your state contractor licensing board.

JR1 (talk|edits) said:

September 13, 2006
Wait. You're gonna report a cash contractor? The entire world of contracting will collapse under the weight of it...all the side jobs, the unlicensed, the inept. All the free houses they build for each other from the 1st Bank of Owes...our economy will shudder and perhaps collapse as well. Consider carefully before you act. (And I think with IRS, you need an ID# to reference...)

Jdugancpa (talk|edits) said:

13 September 2006
Why would you report him? Either you knew up front what the terms were and agreed to pay in cash and probably had the work done for less, or you didn't know, and you offer him a check and he requests cash and you say "No."

Taxea@hawaii.rr.com (talk|edits) said:

13 September 2006
I can't wait for more details...was this personal? How much are we talking here? Is this a client? Give me more to work with...taxeataxea 17:02, 13 September 2006 (CDT)

JR1 (talk|edits) said:

September 13, 2006
Oh, like none of you has a client like this! C'mon, folks. Are we that naive?

BottomLine (talk|edits) said:

14 September 2006
If I understand correctly (reading between the lines) - he is a client of yours and you suspect or he has told you that he receives cash payments and doesn't want to report some or all of this income. Assuming that this is correct and that you are not mad at him for something, as I see it you have two choices: 1) fire the client, 2) make him sign paperwork stating that the smaller amount is his income - you aren't paid to be an auditor - if his numbers don't work, he'll eventually get caught in a lifestyle audit.

DJBCPA (talk|edits) said:

14 September 2006
He is not a client. He did work at my home and charged alot of money. Then, I had to have the work torn out and redone. What a mess and what a problem! So now I would like to report this individual.

ArchCPA (talk|edits) said:

14 September 2006
If this guy is a client, I would refrain from reporting him to the IRS for a variety of reasons (ethical/privacy policy/etc)

If he is NOT a client, and you strongly feel like reporting him, fill this form: http://www.irs.gov/pub/irs-pdf/f3949a.pdf and mail it to the IRS. If you don't know most of the information on the form, it just does not matter. You could also call the IRS fraud hotline at 877-438-4338 and talk to a live person and furnish all the information you have.

Sandysea (talk|edits) said:

14 September 2006
I would vote for going to your local building department inspection division. In each State and County there are violations for performing work as an unlicensed contractor. If he is receiving only cash payments, then my guess he is unlicensed. They will be far more helpful and would keep you from anything that would seem unethical for you in your profession...imho that is

Bengoshi (talk|edits) said:

14 September 2006
Basically you'd like to get "revenge" on this guy by ratting him out to the IRS. But is that really the best way to go about solving your problem? I have to agree w/ Sandy -- best to contact a local or state agency dealing with contractors or possibly get an attorney.

JR1 (talk|edits) said:

September 14, 2006
Or refer him to a local auditor!

Taxref (talk|edits) said:

15 September 2006
Based on the circumstances (which were not fully explained until late in the thread) I think Bengoshi gave the best advice. Talk to an attorney and if necessary sue to get a refund. This is really a case of improperly done work, not a tax issue.

Death&Taxes (talk|edits) said:

15 September 2006
At a field audit in a doctor's office years ago, the auditor asked to go through the client's personal checks. She found a number made out 'cash' in amounts of less than $5,000. All had marked in the memo section 'pintor' if I recall the spelling of the Spanish for 'painter' correctly. The auditor asked about these, and noted the endorsement on the back, a handwritten scrawl. The doctor, a man of Colombian birth, told her this was the man who painted their house. The auditor had a hissy-fit, asking why the doctor had not given the man a 1099. I intervened and asked if the doctor should give his paperboy a 1099. The auditor got quite testy and snitty, but after a minute admitted there was no reason to give one, though the man was probably not paying taxes. The doctor told her that it was no skin off his back and that if she liked, he would give her copies of the man's bills, but by now she had calmed down and responded negatively. Bengoshi and Sandy are right; calling IRS might give satisfaction, but they are just as likely to ignore the issue also. IRS does not want to arbitrate in disputes....that is the reason my tax lawyer friend would tell clients he'd seen the exemption for children split in Appeals.

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