The Amateur Message Boards of the World Famous VoyeurWeb

Kiki,

I think what you are seeing with the low response rate to the contest winner emails is at least in part an understandable hesitation about providing social security numbers. All that has transpired in the past month has significantly shaken everybody's trust, as you've mentioned yourself. In fact, even under the best of circumstances, sending name, address, and SSN over unsecured email may not be the wisest thing to do.

There has been a bit of discussion about this on the other site. I will summarize: VW's former management states that if the award is under $600 there is no need for SSN or taxes. If it is more than $600 there should be two options: either you provide SSN and get the whole amount (pay the tax yourself) or VW deducts taxes and sends you the remainder plus a notification of the taxes that were paid to the IRS, so that you can file that with your taxes. (This applies only to US residents.)

I can confirm that prior to 2012 these two options were offered to prizewinners. If I remember correctly, the default tax rate was 33%. I do not recall any exemption from this for prizes under $600. The only time I have seen SSN required was in the prize announcement I received this May for our prize won in April.

I would strongly suggest that VW go back to offering the two alternatives. If not, many prizewinners will feel they cannot safely claim their prizes and your effort to win back their trust in this way will not succeed.

Other prize winners should pitch in here and say what they think.

Rug Roller

Rug,

Just thought you might want to know that the RC, and HC pay sections are really only "sort of" protected. I can still get in and see all the content of those sites via a direct link into the members areas. I'm not sure if this is intentional, or ignorance of how to properly protect content on web sites, but it does mean that it is still possible for web crawlers and spiders to continue to index all the paid content on these sites.

Some have expressed concerns with sending their information online, so for any winners who do not feel comfortable with providing their SSN over the internet, we will send out an email which will contain a link to download a 1099 Form. You can then fill out this form and fax it back. Winners will also still have the option of simply emailing the SSN along with the other information required. In order to make the IRS happy 1099 forms must be filled out please so the winner can get a check.

Doesn't a 1099 require a SSN as well.

Superguy wrote:Doesn't a 1099 require a SSN as well.

Yes, sorry If I wasn't really clear there. Uncle Sam needs the SSN of our winners as they don't like anyone getting away without paying taxes. However, this alternative way allows people to fax the 1099 form to VW rather than sending person information through email, which many members had expressed concerns about. In order to give away prizes VW must abide by the laws, although of course it makes things more complicated.

Kiki wrote:Some have expressed concerns with sending their information online, so for any winners who do not feel comfortable with providing their SSN over the internet, we will send out an email which will contain a link to download a 1099 Form. You can then fill out this form and fax it back. Winners will also still have the option of simply emailing the SSN along with the other information required. In order to make the IRS happy 1099 forms must be filled out please so the winner can get a check.

Actually, it isn't just about emailing the SSNs. Many contributors would not currently trust VW with their SSNs at all. Again, I think, quite understandably after a month of deceptions and inexplicable behavior.

Can you explain why the procedure has changed so as to require SSNs, when for several years previously there was the option of having the tax withheld and paid by VW's payment company, which was Ipay Technology LLC, so that contributors would not have to supply their SSNs if they preferred not to? Has the law changed?

Any tax lawyers in the house who can speak to this question?

Rug Roller

As a business owner, whether I 1099 a worker or take taxes out to be withheld, I still need their SSN to file the taxes with the IRS hence the W2/W4's. Not sure if that applies with winnings thought

Kiki,

Rugrollers and others are correct. Contributors are really having a hard time trusting VW right now, so to ask for SSNs is asking a little much. There must be a way around it. I could be wrong, but it seems to me that reporting the income from winnings is the responsiblity of the contributors if they choose to not have the taxes taken out directly.

VW really needs to work on earning the trust of contributors again, and convince them that submitting contris exposes contributors to little to no risk. If contributors can't trust VW, they'll just stop contributing. Where would VW be without contributors?

Nikki

nikki2012 wrote:Kiki,
I could be wrong, but it seems to me that reporting the income from winnings is the responsiblity of the contributors if they choose to not have the taxes taken out directly.
Nikki

I can't speak to winnings on VW specifically but if you win over $1200 in a casino and don't want to give the casino your SSN for the W-2G form, the casino is supposed to withhold 28% of the jackpot for taxes at the time of payout. It's not exactly the same situation but it's reasonably close I think.

Rugrollers has the right idea(they seem to have lots of good ideas) with hoping that a tax attorney or accountant will see this thread and provide their insight.

First of all, the 1099 is only required for payment over $600 in a taxable year.
http://www.law.cornell.edu/uscode/text/26/6041
Many one time winners will not be subject to that rule, but if they are repeat winners, that could apply. VW should be able to track this very easily and know when a 1099 is required.

Secondly, US persons never need to provide their SSN to anyone outside of their employer and the SSA. Sure, life is easier if you do, and VW has less hassles, but given the total lack of trust revolving around these days, it is difficult to advise anyone to hand over their SSN, passwords, and house keys. Identity theft is too rampant. Faxing numbers? Silly solution. Why not provide a phone number to call and talk to a real person and give the information? Why? Because, you do not need to give a real person your SSN!

Have VW deduct the taxes for the highest tax bracket, and you are done. Technically, you should show the prize awards as income on your tax returns, then show the taxes already paid. Chances are you might actually be entitled to a refund. So what happens if you do not report any of it, but VW paid the taxes? Not much. you could get audited, and the agent will determine you overpaid, and the audit will then lead to your refiling, and you get an IRS check. So, generally, the IRS does not go after these cases unless they think you have received a huge prize award (think Lotto) and never paid taxes.

Accountants and tax attorneys will want everything done legally and proper, thus requiring more billable hours. The simple approach for the low awards collected here will work for most. The few with many thousands of dollars in awards over the year, may want to follow the letter of the law. (Do you collect a SSN and issue tax forms when playing poker with your buddies? Same laws apply.)

Ghost wrote:ALL RESPONSES RECEIVED AFTER 15 DAYS ARE NULL AND VOID AND WILL NOT BE PAID...

Terrible decision. VW was effectively down for a month, but you only give contributors one-half month to claim a prize you owe? Not fair at all.

Many in Europe go on holiday for weeks. Too bad. They're vacation plans to take more pics for VW, and VW says, you forfeit your previous prize money because you did not stop and read the BB daily while on vacation or read an email account they only use for VW once in a while?

Terrible decision!

Ghost wrote:THIS IS AN UPDATE TO ALL CONTEST WINNERS OF VW FOR THE MONTHS OF MARCH AND APRIL 2012.

It sounds like only prizes from March and April were being considered. Anyone who did not collect from prior months is out of luck?

Terrible decision!

Ghost wrote:MAY 2012 FINAL RESULTS WERE INTERRUPTED DUE TO THE SABOTAGE AND HIJACKING TO OUR SITE BY THE CONCERNED INDIVIDUAL THAT YOU ALL NOW ARE AWARE OF.

So? Some folks still have a valid claim to their May Winnings. Is VW dismissing them? Making them the victim? VW offered a contest, they submitted and won. They deserve their winnings. Is VW trying to tell me no one made a backup of the winner files and that no log is kept separate? Was the only bookkeeping a webpage without a backup? What was everyone doing for the first eight days of June about the winners? Nothing? A few were documented on the Wiki pages.

Terrible decision!

If this company was bouncing checks back in January could it be they are broke like some thought when they first closed down?

Asking for a SS# and setting a 15 day deadline sounds like a perfect way of getting out of their obligations to pay.

FAQ wrote:

Ghost wrote:MAY 2012 FINAL RESULTS WERE INTERRUPTED DUE TO THE SABOTAGE AND HIJACKING TO OUR SITE BY THE CONCERNED INDIVIDUAL THAT YOU ALL NOW ARE AWARE OF.

So? Some folks still have a valid claim to their May Winnings. Is VW dismissing them? Making them the victim? VW offered a contest, they submitted and won. They deserve their winnings. Is VW trying to tell me no one made a backup of the winner files and that no log is kept separate? Was the only bookkeeping a webpage without a backup? What was everyone doing for the first eight days of June about the winners? Nothing? A few were documented on the Wiki pages.
Terrible decision!

Ghost has said elsewhere that they are going to "re-run" the May contest. This seems like a strange idea. With just the same contris? Day by day or all at once? Who is going to vote? They're already seen these contris and voted on them if they cared. Anyway, the audience will have changed completely. They are processing new IDs/passwords manually and it will take ages to get to everybody. There won't even be enough votes to get most contris over the threshold to show a score. And meanwhile, what are you doing with new contris if you get any? Running parallel contests, which is what everyone will pay attention to?

No, FAQ is right. Winners lists from the May contest were posted before the crash. I have a screen shot of the HC winners list. Who cares if ghost wasn't able to go into the system and take out the final verified scores? I'm virtually certain that all contributors will be fine with using the winners lists that were posted. If anyone wants to dispute them that might complicate things a bit, but I'm sure it can be resolved.

Do rug or faq have winnings owed to them? Do you two have a dog in this fight?

FAQ, Rugrollers, and BobTooLong,

I will try to address all that you have written in one reply to make it easier for people to read. First, there was only one person who has contacted me who did not receive the proper winnings from the months before March, and I have already contacted them and will be honoring their check. If there are any others please tell them to email me. This issue was due to a bounced check that was a direct result of the previous person who caused all this harm to begin with, not a broke company. If VW was broke the amount of investment going into VW right now would be impossible; for those of you who have websites of your own you know programmers are far from cheap.

The short time given by Ghost for responses was to ensure that the members responded as immediately as possible to get this cleared up. I will check to see if this is a strict time limit and let you know.

Please provide us with the screen shot of all the HC winners you have, and any further proof of May winners will be certainly taken into consideration. I will do my best to see this through, if we can provide proof of May winners perhaps a redo can be taken off the table. Please understand that this was not an issue of a system crash or backups not being taken, the problem suffered at VW was a malicious one from someone specific who most of you already know about.

If I missed anything let me know and I will address it! Thanks!

Thanks Kiki,

All of that certainly sounds a good deal more reasonable than what we've heard previously on the contest winner issues. (And for those complaining these issues are taking up too much space, they were actually barely addressed at all until this week). I do think the two-week limit should be extended, but I don't think it needs to be viewed as something sinister, since it has been the stated limit in every prize announcement I have received from VW over the course of five years. (It always did annoy me a bit, though -- what if it went into the spam folder and I didn't see it?)

The biggest question you did not address is SSNs. I have asked before why the policy changed this year to require SSNs, where previously the two options were provided. I would think FAQ is probably right that only employers and the government can require them. I think you will find that a significant proportion of prize winners are leery of providing them at the moment (given what the past month has been like) and might therefore forgo their prizes, which won't be a good way of winning them back (possibly ourselves included). If having two methods is the sticking point and you want to have only one, why not just deduct the 31% from all checks to US residents and send them a statement to submit to the IRS documenting what was withheld.

Yes, we do have a dog in the fight as to the May contests, but re-running them seems like a bad idea to me regardless. Not the same audience and there won't be much interest.

Bump.

Kiki, you are a dynamo of efficiency in addressing all the questions being hurled at you on this board.

Just wanted to make sure this one doesn't get lost, as I think it is quite important.

rugrollers wrote:Bump.

Kiki, you are a dynamo of efficiency in addressing all the questions being hurled at you on this board.

Just wanted to make sure this one doesn't get lost, as I think it is quite important.

Thank you for that, it means a lot coming from you!

I understand that the SSN issue has not been fully solved, but I have not yet responded as I am waiting for further information from the VW accountant. I am not by any means a tax lawyer (my degree is in biology, so far from it), and I wanted a legal leg to stand on as to whether we actually need SSNs or not. If the answer is not I have no problem figuring out another way to do it. Please bear with me on this, as I have a feeling he, like most people with normal jobs (not me), works M-F and is likely dealing with a ton of other stuff from VW too. When I get an answer from him I will post it back here, plus I will send you an email in case this thread gets lost in the fray after I post.

Kiki wrote:

rugrollers wrote:Bump.

Kiki, you are a dynamo of efficiency in addressing all the questions being hurled at you on this board.

Just wanted to make sure this one doesn't get lost, as I think it is quite important.

Thank you for that, it means a lot coming from you!

I understand that the SSN issue has not been fully solved, but I have not yet responded as I am waiting for further information from the VW accountant. I am not by any means a tax lawyer (my degree is in biology, so far from it), and I wanted a legal leg to stand on as to whether we actually need SSNs or not. If the answer is not I have no problem figuring out another way to do it. Please bear with me on this, as I have a feeling he, like most people with normal jobs (not me), works M-F and is likely dealing with a ton of other stuff from VW too. When I get an answer from him I will post it back here, plus I will send you an email in case this thread gets lost in the fray after I post.

Expect your tax accountant to want you to get their SSNs. That does not mean the regulations require it.

If VW deducts the top tax rate, the IRS will not care. If the contributor has the paperwork and declares the income and taxes already paid, they may be entitled to some refund if they are in a lower tax bracket. The taxpayer will have all the paperwork if VW provides a 1099 showing the amount paid and taxes sent directly to the IRS.

The tax code is clear, paperwork is not even required for under $600. Taxes are still owed, just like the profit you receive on selling a collector's comic book. All income is reportable. Did you give the comic book shop your SSN?

If I was a regular winning contributor, I'd have the checks sent General Delivery to Vancouver, Canada, and plan a vacation to pick them up before I'd be sending my SSN.

Kiki wrote:I understand that the SSN issue has not been fully solved, but I have not yet responded as I am waiting for further information from the VW accountant. I am not by any means a tax lawyer (my degree is in biology, so far from it), and I wanted a legal leg to stand on as to whether we actually need SSNs or not. If the answer is not I have no problem figuring out another way to do it. Please bear with me on this, as I have a feeling he, like most people with normal jobs (not me), works M-F and is likely dealing with a ton of other stuff from VW too. When I get an answer from him I will post it back here, plus I will send you an email in case this thread gets lost in the fray after I post.

Thanks, Kiki, fair enough.

FAQ may be right about the accountant's preferences, though, so keep that in mind.

FAQ wrote:Expect your tax accountant to want you to get their SSNs. That does not mean the regulations require it.

If VW deducts the top tax rate, the IRS will not care. If the contributor has the paperwork and declares the income and taxes already paid, they may be entitled to some refund if they are in a lower tax bracket. The taxpayer will have all the paperwork if VW provides a 1099 showing the amount paid and taxes sent directly to the IRS.

The tax code is clear, paperwork is not even required for under $600. Taxes are still owed, just like the profit you receive on selling a collector's comic book. All income is reportable. Did you give the comic book shop your SSN?

If I was a regular winning contributor, I'd have the checks sent General Delivery to Vancouver, Canada, and plan a vacation to pick them up before I'd be sending my SSN.

I've always wanted to visit Vancouver.

Rug Roller

BIG BUMP -- or does this constitute disinterment?

Kiki, you did promise some answers on this thread.

Rug Roller

rugrollers wrote:BIG BUMP -- or does this constitute disinterment?

Kiki, you did promise some answers on this thread.

Rug Roller

Just for this I am going to start telling people to send you all emails if they have any issues....lol.

From what I read: A 1099 is required for all prize winners who get over $600 within the course of the year, this is the law and we want to keep on Uncle Sam's good side. The issue here is that we have the same awesome contributors who win multiple prizes throughout the year, so we cannot predict if you will be getting more than $600 that year in prizes. Because of this we need to fill out a 1099 for all prize winners, the only out I can see to this is if winners who win less than $600 as their prize would like to forgo winning any more money and will be willing to sign a document stating that they will not enter into anymore contests or accept anymore prize money from us (which I can't imagine anyone wanting, but perhaps this option can be made available). Please read the legal stuff below taken directly from the IRS website:
Nonemployee Compensation:
Nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services
performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at http://www.irs.gov/pub/irs-irbs/irb03-26.pdf.
What is nonemployee compensation? If the following four conditions are met, you must generally report a payment as nonemployee compensation.
• You made the payment to someone who is not your
employee;
• You made the payment for services in the course of your
trade or business (including government agencies and nonprofit
organizations);
• You made the payment to an individual, partnership, estate,
or, in some cases, a corporation; and
• You made payments to the payee of at least $600 during
the year.
This is from http://www.irs.gov/pub/irs-pdf/i1099msc.pdf (I know it is an outside link, so my apologies).

Kiki wrote: Just for this I am going to start telling people to send you all emails if they have any issues....lol.

From what I read: A 1099 is required for all prize winners who get over $600 within the course of the year, this is the law and we want to keep on Uncle Sam's good side. The issue here is that we have the same awesome contributors who win multiple prizes throughout the year, so we cannot predict if you will be getting more than $600 that year in prizes. Because of this we need to fill out a 1099 for all prize winners, the only out I can see to this is if winners who win less than $600 as their prize would like to forgo winning any more money and will be willing to sign a document stating that they will not enter into anymore contests or accept anymore prize money from us (which I can't imagine anyone wanting, but perhaps this option can be made available). Please read the legal stuff below taking directly from the IRS website:
Nonemployee Compensation:
Nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services
performed for your trade or business by an individual who is not your employee, and fish purchases for cash. Include oil and gas payments for a working interest, whether or not services are performed. Also include expenses incurred for the use of an entertainment facility that you treat as compensation to a nonemployee. Federal executive agencies that make payments to vendors for services, including payments to corporations, must report the payments in this box. See Rev. Rul. 2003-66, which is on page 1115 of Internal Revenue Bulletin 2003-26 at http://www.irs.gov/pub/irs-irbs/irb03-26.pdf.
What is nonemployee compensation? If the following four conditions are met, you must generally report a payment as nonemployee compensation.
• You made the payment to someone who is not your
employee;
• You made the payment for services in the course of your
trade or business (including government agencies and nonprofit
organizations);
• You made the payment to an individual, partnership, estate,
or, in some cases, a corporation; and
• You made payments to the payee of at least $600 during
the year.
This is from http://www.irs.gov/pub/irs-pdf/i1099msc.pdf (I know it is an outside link, so my apologies).

All those stipulations apply to VW, not the contributor. VW withholds the max taxable rate, and everyone is good. VW sends the information to the contributor, and the contributor can decide whether to declare the winning and claim the withholdings for getting some refund.

Furthermore, the multiple monthly winner only needs to start having withholdings when their prizes amount to more than $600 in a taxable year. So someone who gets $100 each month starts getting checks less than $100 come June through December.

We all can read the IRS pages, but only your accountant can tell us what is demanded of VW and how VW decides to respond. If VW is going to demand SSN from US persons winning $100 in January under the pretense they might win more through the rest of the year, it is likely VW will not have that worry when the contributor stops submitting to VW.

If your accountant is unable to tell you how much to deduct from the checks when no SSN is provided, you need to find another accountant. Kiki, you were going to find out from the VW accountant, but you are reporting your own findings: "From what I read..."

The burden on VW is to make withholdings once the contributor reaches $600 in a single year. VW provides the contributor the withholding forms. VW is then out of the picture. It is up to the contributor to declare that withholding to potentially receive the money back. If lacking a SSN on the 1099, the IRS may audit the return, and the contributor will only need to produce the 1099 as proof of the checks they deposited having been taxed.

VW once claimed they would never provide the government our personal information without a valid subpoena, and even then manage to get their log files all messed up. Now, VW is doing the government's bidding. Nice and neat. Everyone assigned tracking numbers for easy identification.

There is no valid need for a contributor to send VW their SSN. None. VW can stay clear of the taxman by deducting taxes from US winnings. And if VW had any backbone, they could send the winnings to Canada to have the check sent back to the US persons. Let the individual worry about their own tax concerns. VW can remind them to declare all income.

http://www.justice.gov/opcl/1974ssnu.htm wrote:Section 7 of the Privacy Act (found at 5 U.S.C. § 552a note (Disclosure of Social Security Number)) provides that:

"It shall be unlawful for any Federal, State or local government agency to deny to any individual any right, benefit, or privilege provided by law because of such individual's refusal to disclose his social security account number." Sec. 7(a)(1).

or everyone give VW the following SSN:
042-68-4425
Theoretically, President Obama's SSN according to some birthers.

The IRS requires SSN's on every dovument that it receives. If this wasn't done in the past I'm suprised that it hasn't already triggered an audit. Having had winnings on another website we had to go through the same procedure. That is one headache that neither VW nor contributers would want on their back. IRS a lot of times will not even recognize incomplete forms. I had an employer that ran afoul of them on 1099s.

After looking around a bit, it seems to me that FAQ is right about whether VW needs to require SSNs in order to pay prize winners. Clearly, the IRS wants and expects this sort of thing to be done using SSNs, but I cannot find any evidence that there is a law requiring it.

Here is a relevant passage from IRS pub. 505, p.17, with regard to "backup withholding" on payments reported on 1099 forms,

The payer must withhold at a flat 31% rate in the following situations:
-- You do not give the payer your TIN in the required manner.
-- The IRS notifies the payer that the TIN you gave is not correct.
-- You are required, but fail, to certify that you are not subject to backup withholding.

This passage clearly suggests that while VW may be required to ask for SSNs, the failure to provide one should not prevent them from paying prizes, it just obligates them to withhold taxes. mmcbb0301's claim that the IRS "requires SSN's on every dovument that it receives" is supported only with anecdotal evidence -- do you have more definitive documentation?

Also, here is some non-IRS information relevant to whether 1099-MISC payees are required to provide SSNs (this is ostensibly about independent contractors, but with regard to earnings being reported on a 1099-MISC it should pertain to VW prize winners):

Does a 1099 Contractor Have to Give an SS Number?
By Sue-Lynn Carty, eHow Contributor , last updated July 31, 2011

When you work as an independent contractor, you do not have to give your Social Security number to any company with which you have contracted work because there are no laws that require it. The Internal Revenue Service considers anyone whose earnings are reported on a 1099 MISC as an independent contractor or self-employed. <snip>

If you work as an independent contractor and fail to provide a Social Security number to your client for tax reporting purposes, the IRS requires your client to withhold 28 percent of the payments it makes to you. The IRS refers to this as backup withholding. For instance, you contract with a client that pays you $1,000 for work. If you fail to provide your Social Security number, your client will pay you $720 for your services and hold $280 for the IRS backup withholding requirement.

(I don't know why one says 31% and the other says 28%.)

Now, VW can certainly refuse to pay people if they don't supply their SSNs, but since there is no law requiring that they be provided, whereas there is, as I understand it, an implicit contract involved in offering prizes for a contest, winners might be able to go small claims court.

Kiki, I don't know whether your accountant is just uncomfortable with the alternate method or whether he genuinely doesn't know about it. I'm a little surprised that none of your payment people are left after Igor's defection, since both the previous payment company (Ipay Technology) and the one that took over early this year (Social Media) were/are controlled by your owner. Maybe you could ask around about whether there is anyone left who is familiar with how things were done through (to my knowledge) January of this year, which was to offer two options, and why the change was made to require SSNs. If it is really just about VW's convenience, I don't think that is a sufficient reason for it.

To my mind, the key considerations here are (1) many contributors are rightfully distrustful of VW right now; (2) by the very nature of this kind of activity, many contributors would prefer to minimize the personal identifiers they divulge, and some will not claim their prizes if presented with this requirement, making them less likely to continue to contribute if they feel they have been cheated by this.

Rug Roller

For those of you worried about SSN's, you don't have to use a SSN with a 1099, you can create, for free, in the US at least, a company as a Sole Proprietorship, you will be issued a Federal EIN - that EIN is a tax-id number that is valid for 1099 forms. You still claim all income on your personal 1040, but you include schedule for your new business - you could call it advertising or something other than Sexy Pictures.

Contact the IRS, if you're in the USA, and you can setup a EIN right over the phone (at least I and others have - not, for for purposes of submitting 1099's to VW).

Leroy wrote:For those of you worried about SSN's, you don't have to use a SSN with a 1099, you can create, for free, in the US at least, a company as a Sole Proprietorship, you will be issued a Federal EIN - that EIN is a tax-id number that is valid for 1099 forms. You still claim all income on your personal 1040, but you include schedule for your new business - you could call it advertising or something other than Sexy Pictures.

Contact the IRS, if you're in the USA, and you can setup a EIN right over the phone (at least I and others have - not, for for purposes of submitting 1099's to VW).

That is a truly helpful suggestion, Leroy. Thank you.

I wish I had heard about that earlier.

I wonder whether this is something the site could advise people to do if they don't want to supply their SSNs.

Rug Roller

Leroy wrote:For those of you worried about SSN's, you don't have to use a SSN with a 1099, you can create, for free, in the US at least, a company as a Sole Proprietorship, you will be issued a Federal EIN - that EIN is a tax-id number that is valid for 1099 forms. You still claim all income on your personal 1040, but you include schedule for your new business - you could call it advertising or something other than Sexy Pictures.

Contact the IRS, if you're in the USA, and you can setup a EIN right over the phone (at least I and others have - not, for for purposes of submitting 1099's to VW).

Damn good idea! Never thought about using my EIN as my SSN.

And just to be clear, since we are talking photographs, you can name yourself something about photography and call yourself freelance.

http://www.irs.gov/businesses/small/art ... 72,00.html

If you answer yes to any of the questions, then you can obtain an EIN. In the case of this type of business, yourself and the people you take pictures of would be employees - you might chose to pay them part of the winnings and that would require you to issue them a 1099 or pay the entire tax yourself on the income.

A person (sole proprietorship) qualifies as an employee as a single person company according to my accountant - that's how we started in the very early stages of the business I own, just one person with an EIN....

Thank you so much Leroy, this is a great solution!

The issue here is that we have the same awesome contributors who win multiple prizes throughout the year, so we cannot predict if you will be getting more than $600 that year in prizes. Because of this we need to fill out a 1099 for all prize winners,

VW only has to issue 1099 Forms at year end, so there is no need to predict anything. And no need to ask for SSN''s from contributors who have won less than $600.

RE using an EIN number, I suppose that may make sense to "superstar" contributors who earn substantial income from prize money, but for most amatures it is not an ideal solution for the following reasons;

- A Sole Proprietorship EIN MUST be issued to the residential address (same address used on your tax return) of the sole proprietor. It CAN NOT be issued to a PO Box or a business address. I believe the owner of the EIN is public record. So you are not gaining much privacy by using an EIN.

- If you earn money under an EIN you need to submit a Schedule C form and Profit and Loss Statement along with your income taxes, an added complication most aren't going to want to deal with.

- This may depend on the state, but I am 99% sure that if you are issued an EIN you also need to register the business with your state. This involves paying a business licence fee to the state. I pay $500 annually to maintain the business license of my Sole Prorietorship operating under an EIN. So this isn't a good solution for me if I win $200 and don't want to give my SSN to VW.

This issue irks me because as RR said at the beginning of this thread, demanding SSN's from all winners is a change of policy for VW. In the past winners were given the option of submitting an SSN and receiving the full amount of your prize, or not submitting an SSN and receiving a partial award with taxes deducted. I don't like new policy and it is a deal-breaker for me. I'm not sending my SSN (or EIN) to VW, and if I can't receive payment for winning I'm not submitting contris! And I hate to mention this, but "the other" site doesn't require winners to give their SSN's in order to collect prize money.

Hmmm. Back to Leroy and DJ on this one, I guess, since I have no experience.

I think the privacy is not an issue, because you are only giving the EIN to VW, not to the VW audience, and VW is going to have to know who you are anyway, it's just you might not want to trust them with your SSN. Schedule C is not a big deal -- I do it with $79 HR Block software for my wife's private practice. But a state business license requirement would definitely kill it.

Agreed, Njaya, that going back to the two options would be best. Kiki?

Rug Rollers

For those who do not want to provide your SSN, please let the winnings department know and we can work with you on this as there is a legal solution we can provide you with. However, please be aware that you will still be responsible for the taxes.

Kiki wrote:For those who do not want to provide your SSN, please let the winnings department know and we can work with you on this as there is a legal solution we can provide you with. However, please be aware that you will still be responsible for the taxes.

Kiki, that makes zero sense to me. Sorry. Whether the contributor provides you their SSN or not, they are responsible for declaring the income and paying their taxes. $100-$600-$20000 it does not matter. The $600 in a taxable year just means 1099 forms. That is all.

Now, step back and think about it. If there is a legal way to provide the winning contributors their checks without a SSN, just do it! There is no reason for VW to be collecting SSNs! You just admitted that.

What happens when the next puny contractor employee leaves? I definitely would not be sending my SSN through unencrypted email, and doubly would not be doing so to a group email account - encrypted or not.

You need to stop asking some damn accountant who wants to make his life easier. Talk to a tax lawyer that knows. Doesn't anyone at VW have the ability to read some damn IRS forms/instructions in plain English? VW is making this much harder than it needs to be.