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Subject: Request W-2 for Insurance Payment?
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Author Messages
ChengyuS
(California)

Posts:7


02/27/2013 2:00 PM  
Hello,

Our HOA is currently shopping for earthquake insurance. Our property management company requires a W-9 from anyone we pay more than $600 to (presumable to issue 1099 to them later), but the insurance agencies I talked to said they do not provide W-9. One insurance agent explained to me something like "...paying an insurance bill is not considered 1099. It would be counted as a business expense. A 1099 usually resembles a contractor or employee or a company that will be doing services for you. This is an insurance bill. An insurance bill is the same as paying taxes, paying your water or your electric bill". What the insurance agent said also makes sense, so who is right? Do we need to request W-2 from the insurance agencies?

Thanks.
MelissaP1
(Alabama)

Posts:7928


02/27/2013 2:05 PM  
What is wrong with your Management company? Of course they do NOT need a W-2 from the insurance company. It is a BILL just like electricity. I don't understand their request. If there was a handyman working for your HOA, then that would require a 1099 or W-2. However, the insurance company is NOT an employee.

I would shop around for a new MC if they can't understand that.

Former HOA President
ChengyuS
(California)

Posts:7


02/27/2013 2:10 PM  
Thank you very much for the quick reply. I'm new to the HOA business and it seems like I've come to the right place!
MelissaP1
(Alabama)

Posts:7928


02/27/2013 2:41 PM  
Welcome. You have come to the right place for advice. Keep in mind we are not lawyers but seasoned HOA members. Each state will also be different as every HOA is. Please feel free to come back and ask questions.

It looks like that insurance agent you talked to was correct. Just make sure to do alot of comparison shopping when looking for insurance. It can be very trick endeavor. The posters from California will probably be the most beneficial to you on the earthquake insurance. Most of us it's not required as much as flood insurance may be.

Welcome again!

Former HOA President
TimB4
(Virginia)

Posts:16198


02/27/2013 4:31 PM  
Simply ask your management company to review the 1099-misc instructions.
ChengyuS
(California)

Posts:7


02/27/2013 5:05 PM  
Thanks for the link to 1099-misc. I'm reading the instructions myself, and under the instructions for "Box 7. Nonemployee Compensation", there's the following:

"Examples.

The following are some examples of payments to be reported in box 7.
...
. Payments to an insurance salesperson who is not your common law or statutory employee. See Pub. 15-A for the definition of employee.
..."

It looks to me like insurance payment indeed needs to be reported. Am I reading it right?
MoM1
(Massachusetts)

Posts:56


02/27/2013 5:30 PM  
Your association is not paying a salesperson for services rendered, but paying a premium for coverage. This is not considered "compensation" for 1099 purposes. It may reduce confusion if the association accountant talks to the management company and gives them a lesson on 1099s.
ChengyuS
(California)

Posts:7


02/27/2013 5:35 PM  
Thank you for clarifying that. (And I wish we had an accountant. :-)
ChengyuS
(California)

Posts:7


02/27/2013 5:44 PM  
Sorry I made a stupid mistake. I meant to say W-9 form but instead I wrote W-2, even in the subject. Is there a way to edit the subject?
TimB4
(Virginia)

Posts:16198


02/27/2013 8:12 PM  
A W-9 is a request for a tax identification number.

LarryB13
(Arizona)

Posts:4099


02/28/2013 12:16 AM  
The instructions for a W-9 can be found at http://www.irs.gov/pub/irs-pdf/iw9.pdf

The form itself is at http://www.irs.gov/pub/irs-pdf/fw9.pdf

From my reading of the instructions it appears that the purpose of the W-9 is to determine whether the payor should withhold taxes. If the payee submits the W-9 claiming to be exempt from withholding, then the payor should not withhold taxes.

The instructions suggest that payments for insurance paid to a corporation would not be subject to withholding. Therefore, there is no need for a W-9 from the insurance company.

BTW, my experience in my own businesses has been that it is common practice to request W-9's and common practice to fill them out and return them to the requesting party. I don't know why the insurance agents are making such a big deal out of this.

MelissaP1
(Alabama)

Posts:7928


02/28/2013 1:26 AM  
Larry it is easy to explain why the insurance agent would not share this information...It may contain their social security number. That is something I would not release either. Especially to a HOA. Even my own HOA would not get that information...If they had to supply this information it wouldn't be as their company but them as a representative. I don't see the need to fill out this form at all.

Former HOA President
LarryB13
(Arizona)

Posts:4099


02/28/2013 5:13 AM  
Posted By MelissaP1 on 02/28/2013 1:26 AM
Larry it is easy to explain why the insurance agent would not share this information...It may contain their social security number. That is something I would not release either. Especially to a HOA. Even my own HOA would not get that information...If they had to supply this information it wouldn't be as their company but them as a representative. I don't see the need to fill out this form at all.



An insurance agency, like any other business, should have an Employer's ID Number (EIN). The IRS issues these on request, even for individual proprietors. No one running any sort of business ought to be doing so under his own SSN.

That said, I am not sure why the OP would be paying the insurance agent instead of paying the insurance company directly.

MelissaP1
(Alabama)

Posts:7928


02/28/2013 5:54 AM  
That is what I am saying. If you read one of the above statements it kind of lended itself to make you believe that it was the individual insurance salesperson who was required to fill out the W-9 form. It was NOT the company which would have that EIN. So as an individual salesperson for a company even if I owned the place, I wouldn't be handing over my social security number. The minimum would be that EIN and it would be in my companies name. Which still I don't believe is needed here as it is an insurance bill just like the electricity or other payments.

Former HOA President
BruceF1
(Connecticut)

Posts:2535


02/28/2013 5:59 AM  
A W-9 is a request for a tax ID number, which could either be an SSN or an EIN. Form 1099-MISC is used to report income over $600 (usually as non-employee compensation) to individuals and sole proprietorships. There are penalties for not filing a 1099 when required. The purpose of the W-9 is to obtain the taxpayer's ID on the 1099 when it is prepared and filed.

However, you are not required to file a 1099 when payments are made to a corporation, so no W-9 is required.

I don't know what your MC's hangup is. It could simply be a misunderstanding, an employee who is simply blindly following a set of instructions, or a new management company that has a lot to learn.
ChengyuS
(California)

Posts:7


02/28/2013 8:39 AM  
Posted By MelissaP1 on 02/28/2013 5:54 AM
That is what I am saying. If you read one of the above statements it kind of lended itself to make you believe that it was the individual insurance salesperson who was required to fill out the W-9 form. It was NOT the company which would have that EIN. So as an individual salesperson for a company even if I owned the place, I wouldn't be handing over my social security number. The minimum would be that EIN and it would be in my companies name. Which still I don't believe is needed here as it is an insurance bill just like the electricity or other payments.




Our property management company requested W-9 from the insurance agency (i.e. the company), not the insurance salesperson. Sorry I didn't make that clear.
ChengyuS
(California)

Posts:7


02/28/2013 8:53 AM  
Posted By LarryB13 on 02/28/2013 12:16 AM

...
BTW, my experience in my own businesses has been that it is common practice to request W-9's and common practice to fill them out and return them to the requesting party. I don't know why the insurance agents are making such a big deal out of this.




I think their concern was that my property management company may mistakenly report the insurance premium payment as their (i.e. the insurance agency's) income.
NathanC3
(New Jersey)

Posts:2


12/18/2018 2:14 AM  
Seriously, run away from this insurance agent once they ask you for such things. [url=https://fillable-form-w2.pdffiller.com/]W2 form[/url] is for annual payrolls, employer fills them out for employees. You should question that guy's adequacy
NathanC3
(New Jersey)

Posts:2


12/18/2018 2:16 AM  
It should have been linking to this template of the form: https://fillable-form-w2.pdffiller.com/
SueW6
(Michigan)

Posts:458


12/18/2018 6:44 AM  
If the insurance company made a payment to the HOA ( for a settlement, for example) then the company would ask for a W-9 from the HOA - for their records.
KerryL1
(California)

Posts:6242


12/18/2018 10:41 AM  
Old OP.
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