We have two employees that work as escrow officers. They also happen to be attorneys that provide the legal service; deed preparation. In Texas and Ohio deed preparation is always done by attorneys. This service is also paid through the escrow file; payments made through the escrow file are not reportable on a 1099.

Can we pay them through the file or should they be paid through payroll?

Years past we had a situation where escrow officers were doing notary signings after hours,  these are paid through payroll, not the escrow file.

Second question - if the attorneys  were PC's would it change anything?

We have a retired employee that is acting as a witness in a jury trial our company is involved in, the invoice notes the number of hours and his last paid hourly rate.  Do we issue a 1099-Misc to him , and if so is it in Box 7?

A settlement to an adversarial claimant was for a strip of property that was needed to make our policy holders title whole.  The claimant is saying that they should have received a 1099S, as the payment was for a property sale.  I contend that this is a settlement that included the deed as part of the settlement, so would be reported on a 1099MISC.

1) Which is correct?

2) I asked for the full details of this case after the 1099MISC's were sent out, when it was brought to my attention by the claimant.  It seems that this should fall under the claimant "fixed and deteminable" exception.  Do you agree? 

3) My coworker was unsure if this fit within the exception mentioned in 2), so she played it safe and did not exempt the settlement (if in doubt, report).  Even though this may be an exception, is there any consequences with the IRS for reporting on exempt settlements?  Are there settlements we are required not to report?

Box 3 - Claimant reporting question

1)  How do reimbursements fit into the picture?  I work for a title insurance company.  My company paid the policy owner (the claimant) a settlement for a special assessment on their property that was missed at the closing and was paid by the claimant directly.  The settlement to the claimant was a reimbursment for the exact amount they paid (thus fixed and determinable), so no extra funds.  Is this still reportable in box 3?

2)  And to muddy the waters:  In the above transaction, two payees were named.  They are married.  I reported the full amount of the settled reimbursement to both.  Is this correct?  Or do I just need to report to the first married person listed.

3)  Finally, it turned out that the husband died soon after the payment, but long before the 1099MISC was sent.  Would this make any difference in what is reported?

I have a question about a legal settlement and I have never seen one done this way before. We have been asked to make the check payable to the attorney in trust for the claimant. How would this be reported? Does it just get reported on a 1099 Misc to the claimant, to just the attorney, or to both?

When requesting a W9 for a large settlement, the following email was received from the Chapter 13 Trustee:

"We are tax exempt so we don't issue W-9s and don’t have an estate EIN."

Staff Attorney
Office of the Chapter 13 Trustee

I understand that the amount is not reportable, but does this negate the obligation to document the payee by collecting a W9 or getting tax ID information?  Or in other words, are Chapter 13 trustees truly exempt from providing a W9?

I have some settlement payments coming thru at the last of this year. The Attorney was paid in 2012,  if the plaintiff is not paid until 2013, do I have to issue 2 1099Misc to the plaintiff, one for 2012 for their attorney portion and then one for tax year 2013 for the plaintiff portion?  Or can I make note of the attorney portion and put it on their tax year 2013 1099?

In the course of handling a claim file, there is occasionally a need to pay the claimant for lost wages due to our insured's negligence.  I believe these wages need to be reported on a 1099 Misc.  Where in in the IRS regulations is that indicated?

When we issue a multiple party check that would include a mortgage company and an attorney, would we be responsible for sending a 1099 to the attorney or would the mortgage company? The attorney would be representing our insured on a disputed claim.

Also, would we (the insurance company paying out on a claim) would need to send a 1099 to both the mortgage company and the attorney for the gross amount to both parties?

Even though we do not know a fixed or determinable amount of income for the mortgage company, there would still be a reporting obligation?

I have received a request to pay one large settlement (over $30k) in a Chapter 7 bankruptcy case to release all obligations arising out of the Debtors bankruptcy proceedings, which include any interest the estate may have in the Debtor's former residence.  The payment is being made to the trustee of this Chapter 7 bankruptcy case, who happens to be an attorney.  This attorney has provided two W9's (Chapter 7 & 11 - Jan 2011 version), one each for the husband and wife Debtors listed under the Name section, with the attorney listed as the trustee for each.

We tried to verify the Estate tax ID's in the IRS database and neither of the ID's work against any name on the form (trustee or debtor), resulting in a "3-Tin and name combo do not match IRS records".  The attorney insists that the Estate tax ID numbers are good. 

1) Is it possible that the IRS records have not been updated yet?  And if so, would this be the correct IRS error (I would think "2-Tin entered is not currently issued" would be more appropriate)?

2) Since the tax ID cannot be validated, what would you suggest be the best way to handle this?

3) Is this transaction reportable?  If so, to which recipient?  The trustee under Box 14 since they are an attorney, the two debtors named in the W9's but not on the payment unde Box 3, or some combination?