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Subject: Association check made out to cash for contractor
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Author Messages
AaronS7
(New Jersey)

Posts:2


06/27/2020 4:51 PM  
Is there any problem for an association to make a check out to "cash" to pay a non professional handyman type contractor for their work done? We are a small (9 unit single building) self managing for the time being and are having landscaping done by someone we found on Craigslist. Are there realistically audit implications for this? The total work is for $850.
MelissaP1
(Alabama)

Posts:9410


06/27/2020 5:02 PM  
What part of the entire post sounded like a good idea? No it's not okay to make it out for "cash". It is also NOT okay to hire unlicensed or uninsured contractors ever!!! It's just a bad idea and more of a liability thing. A contractor asking for a check written to "Cash" and not their name? Red flags everywhere!

Former HOA President
PaulJ6
(New York)

Posts:974


06/27/2020 5:27 PM  
Melissa is 100% correct.

Are you sending a 1099 to that contractor and is there a W-9? I sure hope so. If not, your HOA is violating tax law and sticking higher taxes on the rest of us, due to the contractor's underpayment with your HOA's help.
PaulJ6
(New York)

Posts:974


06/27/2020 5:28 PM  
And that contractor is a tax cheat. NEVER do business with someone you know to be dishonest.
AaronS7
(New Jersey)

Posts:2


06/27/2020 5:50 PM  
Thanks all for the responses thus far. To whom it concerns, and you know who you are, no need for negativity as the forum policies state. We are new to this until we find a new management company.
PaulJ6
(New York)

Posts:974


06/27/2020 5:52 PM  
Posted By AaronS7 on 06/27/2020 5:50 PM
Thanks all for the responses thus far. To whom it concerns, and you know who you are, no need for negativity as the forum policies state. We are new to this until we find a new management company.




If I find people cheating on their taxes, I’m going to be negative, come h-lol or high water. That is theft and I will not stand for it.
MelissaP1
(Alabama)

Posts:9410


06/27/2020 8:15 PM  
Negative? I was holding back on saying alot more things... Positive this wasn't a good idea... If that is the "Positive" you want to hear...

Former HOA President
BenA2
(Texas)

Posts:732


06/27/2020 8:42 PM  
Posted By AaronS7 on 06/27/2020 5:50 PM
Thanks all for the responses thus far. To whom it concerns, and you know who you are, no need for negativity as the forum policies state. We are new to this until we find a new management company.



You can get a lot of helpful information here but there are some "holier than thou" types who love to judge. Other than that, the advice is correct. Checks should be written out to a person or company and they should fill out a W-9 before you pay them so you can issue a 1099-misc.

For audit purposes, I would document the work and agreement as best as you can, even if it is only notes. The only legal issue is if you can't issue a 1099-MISC, which may result in a penalty at tax time.
GeorgeS21
(Florida)

Posts:2794


06/28/2020 6:37 AM  
OP,

I’ll try.

I’m positive you should know better, and should have known better than to even consider doing those things.
PaulJ6
(New York)

Posts:974


06/28/2020 6:39 AM  
You can always issue a 1099. It may need to be incomplete but that’s better than nothing, and the IRS has suggested approaches if a contractor won’t cooperate.

I’m not sure why anyone would get upset when others point out the need to follow tax law. As I tell my family: none of us like high taxes but the solution is to vote for politicians who will lower them, not fail to pay them, which harms society because it results in law-abiding people needing to pay the tax that tax cheats don’t pay.
CathyA3
(Ohio)

Posts:1068


06/28/2020 6:53 AM  
Some years back, the INS was making a big deal about undocumented workers being hired by the big landscaping companies and being paid under the table. I'm not sure where the laws ended up, but I do remember noise about going after the people who hired under-the-table workers, since this is one of the tipoffs. So there is another potential pitfall.

As the others have pointed out, there are red flags all over this: audit, liability, violations of the law, questionable quality of work. When you have a bunch of experienced regulars jumping up and down saying "Holy cow, NO", it would be in your best interest to pay attention.

(I suppose this is negative and cynical, but this question is such as textbook example of what not to do, my first reaction was that we're being trolled.)
LetA
(Nevada)

Posts:984


06/28/2020 7:25 AM  
Posted By AaronS7 on 06/27/2020 5:50 PM
Thanks all for the responses thus far. To whom it concerns, and you know who you are, no need for negativity as the forum policies state. We are new to this until we find a new management company.





Lighten up Francis, nobody is being negative.
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