This form, along with the 1099-S are in that group of forms that you know is ALMOST ALWAYS going to be a sticking point or at the very least, consume unnecessary time at the closing table. It's kind of like the legal size page you see sometimes asking the client to fill in their life history for the past 10 years. You cringe knowing it's a time consuming document.
Regarding the 1099-S and the Certification of No Information Reporting:
I always try and email, ( so I have written back up ) someone at the title company asking for guidance on these forms explaining they always seem to be a sticking point for the clients in the closing process while at the signing table. I have been told many many times, only have the clients fill out one or the other. That makes it a little easier for sure. Obviously, if you cannot reach anyone at the title company, you may have to go through whoever scheduled this order with you, have them do some work to make the clients job less stressful!
Basically the purpose of these forms are to help the IRS determine if you should be paying taxes on gains and if there are any foreign individuals or entities involved.The IRS has an AUR department that looks for information on taxpayer's returns when the IRS receives informational forms from 3rd party submitters. The AUR department then automatically sends a computer generated letter to the Taxpayer if it appears there should have been information included on the taxpayer's return.
Unless your an attorney or a Tax professional, I believe it would be a good idea to NEVER try and help the clients fill these forms out as you are opening yourself up to liability. That being said, I also believe you need to make sure they are filling in all areas including all of their Identifying information including the TIN, (Taxpayer Identification Number).
On the seller certification form, there is usually a question regarding a 1031 exchange that needs to be answered True, False or NA. Moste clients have no idea what a 1031 exchange is. I have a simple handout that's from the IRS website that usually helps them answer this in less than 10 seconds. I have it in PDF if any of you would like to see it shoot me an IM.
Hopefully this information helps someone's closing go a little smoother. |
