We have had a couple of situations recently where groups insist they must bill/submit claims under the name and TIN of the disregarded entity (DE), but they then want us to report the payments under the name/TIN of the owner. Problem is our systems are not set up to handle multile TINs like this - if they bill using the DE TIN, the system will send the 1099 to that TIN and the name we have set up under that TIN. So, we offer up the following solution.
We tell them we can set them up to pay the DE name, but they have to bill using the TIN of the owner. In doing this we can set them up so the payment goes to the DE name, but the 1099 goes to the owner's name and TIN. However, to make that happen they need to bill using the owner's TIN.
We have gotten some push back on this where some groups say they cannot do this - that this would be out of IRS compliance for them to submit under the owner's TIN.
They also say it is out of compliance for us to report under the DE name and EIN, even though that is how the payments are being issued. Like I say, since our system cannot pay to one TIN and report to another, the 1099 will go to the DE name and TIN if they insist on billing under the DE TIN.
I disagree with both these arguments. First, I do not know how the IRS would ever say it is wrong to report payments as they are made. I also do not believe they would say it is wrong to have them bill using the TIN of the owner, even if we are paying the DE name.
I do understand that a DE does not file a Tax return, and therefore their income is captured by the owner. I am just looking for confirmation that handling as we propose to these groups does not cause a compliance issue between us and the IRS.
I hope this all makes sense.