Regarding: ADD PAYEE in TurboTax's Quick Employee Forms ("Q.E.F.").
As of 01/11/2024, the fields provided by Q.E.F. do not cover all possibilities needed and make it too easy to send incorrect data to the IRS.
A year ago we received nasty notices from IRS because we submitted incorrect data on 1099 Forms for a few sole proprietors - we used their EINs (not SSN's because they provided their EINs) and mistakenly reported their business names before (or without including) the names of the individuals (aka, people; aka, the "sole proprietors").
IRS information includes the following [IRS Publication 1281, Rev. 5-2021]:
"Instructions for Non-individuals and Certain Sole Proprietors"
"For most non-individuals (such as trusts, estates, partnerships, and similar entities), the TIN is the employer identification number (EIN). The EIN on your account may be incorrect because it does not contain the number of the actual owner of the account."
"A sole proprietor must furnish his or her individual name and either his or her SSN or the EIN for his or her sole proprietorship. In addition to his or her individual name, the sole proprietor may also furnish the business name for the sole proprietorship, provided his or her individual name is listed before the business name. A sole proprietor must not furnish only the business name."
SUGGESTIONS to Q.E.F. - Add new fields on the ADD PAYEE pages and instructions that explain:
- If the sole proprietor is an individual (i.e., a person), list his/her name FIRST; then provide an optional field for that sole proprietor's "Business Name" (to be printed on the 1099 Form AFTER the person's name)
- If the sole proprietor uses his/her SSN, use "individual" (not "business") to Add Payee.
- If the sole proprietor uses an EIN, use "business" (not "individual") to Add Payee.
Hopefully this will make it easier for users of Q.E.F. to comply with inflexible IRS rules.
