If a beneficiary simply refuses to provide the requested information, and if the issuer is otherwise unable to obtain it, the issuer should attach a signed affidavit to the tax return establishing reasonable cause for the failure to report the beneficiary’s social security number.
In this case, you could attach documentation of your attempts to contact the beneficiary to prevent any penalties. You would need to mail in your return with that documentation however.
That is, to attach the statement to the Form 1041. and to inform the Beneficiary that such notice has been, as required, reported to the IRS.
I am in this trouble . My sister will not give me the SS#. Should I still give her the distribution? What form do I use to send to IRS if I do give her the distribution.
Hello, can you please share where you sourced this information?
Hello, can you please share where you sourced this information?
What exactly is your situation ? Does the estate have to file an income return and issue a K-1 form ?
Or do you only need to dispurse the assets ?
Yes, the trust needs to file its final return and the K1 needs to be distributed. The assets have been disbursed already.
Ok ... you have a few options ...
1) let the estate pay it's own taxes (if any) thus no K-1 forms are issued
2) issue a K-1 form for only the beneficiaries you have SS# for and skip the non compliant one ... hold back enough from that person's share to pay the taxes on the other beneficiary returns ... of course if you have already dispursed everything then this is a mute subject
3) issue a K-1 form to everyone including the non compliant one and follow the instructions in the prior post to report their non compliance to the IRS and let them pay the penalty fee the IRS will access them.
Treas. Reg. §301.6109-1(c) would apply here.
(c) Requirement to furnish another's number.
Every person required under this title to make a return, statement, or other document must furnish such taxpayer identifying numbers of other U.S. persons and foreign persons.........If the person making the return, statement, or other document does not know the taxpayer identifying number of the other person, such person must request the other person's number. The request should state that the identifying number is required to be furnished under authority of law. When the person making the return, statement, or other document does not know the number of the other person, and has complied with the request provision of this paragraph (c), such person must sign an affidavit on the transmittal document forwarding such returns, statements, or other documents to the Internal Revenue Service, so stating..........
Hi @Critter-3 How does one go about your option#1? Just not list any of the beneficiaries on the form, thus no K1s?
I would start by explaining to the beneficiary that at some point you are going to have to mail in a return with a separate document explaining everything you went through to get their social and their refusal. It will include their name and address and as much information as you have. Not giving you the information just makes them look bad and they get to pay extra. As the person in charge, gather all the information you can to turn them in when you do have to mail the return. You are responsible for trying and must show effort. Log your efforts.
If they still refuse and you can file an estate return without issuing a k-1 this year, that is fine. If you need to file k-1, a final return definitely, then you will have to mail the return and go through the extra trouble.
Follow the Regulation:
https://www.law.cornell.edu/cfr/text/26/301.6109-1
You can easily generate a demand letter yourself and mail it to the noncompliant beneficiary(ies).
There are also a number of sites with templates for affidavits and all you need to do is have them notarized.
Thank you all...I really appreciate the assistance here, I would be clueless otherwise.
Since there is no tax owed (only carryover losses) I kind of doubt the IRS would chase this down regardless, but as trustee I just want to make sure I'm doing everything legally and correctly.
You are correct ... you could just pass the carryoveer losses to the compliant beneficiaries and let just them benefit ... you cannot force someone to take the loss. I have done this many times with beneficiares who no longer file a return and the pass thru loss would be meaningless to them... I explain to all the beneficiaries the benefits and options allowed. Being named as a beneficiary is an honor which can be waived voluntarily.