topic Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9? in Rebuilding Your Credit

I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

kiki2 — Fri, 23 Jan 2009 18:38:45 GMT

I was sued by Frederick Hanna who was representing Cap 1. I obtained counsel and fought the lawsuit using SOL. We filed a counter suit for attorneys fees. I won the lawsuit and the judge just awarded me the attorneys fees as well. Now my attorney is telling me that Fred Hanna is requiring a W-9 before they will issue the check to me for the attorney fees. How can that be? By filling out a W-9 aren't I saying that this is income? It is not income it is REIMBURSEMENT! Can someone please tell me if this is standard practice.

Thanks-

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

203bravo — Fri, 23 Jan 2009 19:18:30 GMT

Excellent question. When I looked up the exact purpose of W9s found out the following

A person who is required to file an information return with the

IRS must obtain your correct taxpayer identification number (TIN)

to report, for example, income paid to you, real estate

transactions, mortgage interest you paid, acquisition or

abandonment of secured property, cancellation of debt, or

contributions you made to an IRA.

Do you think Cap1 is in a position now that they are going to forgive any debts since you've won, if so then the fogiven amount over 600 becomes taxable.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

kiki2 — Fri, 23 Jan 2009 19:25:19 GMT

But since the judge ruled in my favor why would I need to fill out a form to be "forgiven" of the debt? the judge has already established that and if I had not counter sued for my attorney's fees they would not have been able to request a W-9. I am worried that they will end up sending me a 1099 at the end of the year and I will have to claim my award as income, which is clearly is not since it is only reimbursement.

Maybe I am just misunderstanding the purpose of a W-9.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Fri, 23 Jan 2009 20:05:46 GMT

You are correct. A W-9 is filled out prior to the issuance of a 1099. And I agree that the attorney fees should not be income, however I am not an attorney.

I found this on the internet concerning how these fees are paid:

When the lawsuit is over and you have won, your attorney will file with the court an application for attorneys' fees. The application has to include his time records and an affidavit describing his relevant legal experience and justifying his hourly rate. The application must calculate the fees based on an hourly rate multiplied by the number of hours, regardless of what kind of arrangement you have with your lawyer - even if it is pure contingency.

The defendant's lawyers will do their best to reduce the amount the court will decide to award, attacking your fee application by arguing that your attorney's hourly rate is too high, he was inefficient, he did not have to assign so many associate lawyers to do a given task, or your case was only partly successful. The judge will usually reduce the fee application somewhat. The defendant then has to pay the final amount to you or to your lawyer, depending upon whether you have already paid your lawyer.

Since you had an attorney, it seems he/she should know the answer to this.

Message Edited by guiness56 on 01-23-2009 12:05 PM

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

203bravo — Fri, 23 Jan 2009 20:09:39 GMT

I agree, but have also worked with many companies that their internal policies are to get a W9 from anyone they are cutting a check to for any reason.

You are correct if they are going to 1099 you for any amounts over 600 you will get that reguardless. If your ATTY feels comfortable about it then there is probably no issue.

Have you already paid your ATTY. If so is there anyway that they payments can be made directly to his/her office and once received send you a refund? The income was theirs not yours.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Fri, 23 Jan 2009 20:12:08 GMT

the other party cannot ask you to sign the 1099 for the Cap 1 forgiven debt as condition to pay attorneys fees. as a matter of fact, a 1099 is issued, not signed. Cap 1 might issue a 1099 for the debt. Cap 1 cannot issue a 1099 for the attorneys fees.

your attorney should provide you with guidance here. but as far as i know, there is no 1099, and if there was, as said they are at liberty to issue one.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Fri, 23 Jan 2009 20:32:33 GMT

They were asking for a signature on a W-9 not a 1099. At any rate, I was incorrect. Cap one can issue a 1099-C because the SOL has expired. From the IRS:

There are 8 identifiable events in the tax code under which a 1099-c is required to be issued. One of those identifiable events is the running of a debts limitations period. From the Internal Revenue Code Sec. 1.6050P-1(b)(2)(i)(C)

A cancellation or extinguishment of an indebtedness upon the
expiration of the statute of limitations for collection of an
indebtedness, subject to the limitations described in paragraph
(b)(2)(ii) of this section, or upon the expiration of a statutory period
for filing a claim or commencing a deficiency judgment proceeding;

(ii) Statute of limitations. In the case of an expiration of the
statute of limitations for collection of an indebtedness, an
identifiable event occurs under paragraph (b)(2)(i)(C) of this section
only if, and at such time as, a debtor's affirmative statute of
limitations defense is upheld in a final judgment or decision of a
judicial proceeding, and the period for appealing the judgment or
decision has expired.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

203bravo — Fri, 23 Jan 2009 20:41:30 GMT

good catch. however, just because a W9 is requested does not make it necessary for any 1099 to be issued.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Fri, 23 Jan 2009 20:45:45 GMT

In this case I think it means just that. A W-9 is to get tax payer info and the 1099 is to report on that taxpayer.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Fri, 23 Jan 2009 21:04:38 GMT

my bad for the added confusion - your lawyer should advise as if it's reasonable to provide your SSN for the purpose of reimbursement of attorneys fees.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Fri, 23 Jan 2009 23:55:41 GMT

OP, what you're dealing with in this instance is very incompetent lawyers, who probably don't know the first thing about tax forms.

1) A W-9 is not required to issue a 1099 of any type unless you don't have the taxpayer's tax ID. Did these Denny Crane wannabes not think to ASK THEIR CLIENT what your social number was?

2) A 1099 should not be issued for reimbursement of your attorney's fees. It's not taxable income, it's restoration of your legal damages-the attorneys fees. In that regard, it's no different than being reimbursed by an insurance company for the out of pocket cost to repair a vehicle.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sat, 24 Jan 2009 01:19:20 GMT

I do not think it was implied that attorney fees would be paid on the 1099. There was a statement made as to how attorney fees are calculated and reimbursed. What was said is that since the debt was past SOL Cap One could issue a 1099-C for the debt. Given that they asked for a W-9 an assumption was made that a 1099 could be forthcoming for the unpaid debt.

And I do believe that the attorney for the OP could and should have been able to answer the question.

Message Edited by guiness56 on 01-23-2009 05:19 PM

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

kiki2 — Sat, 24 Jan 2009 01:31:51 GMT

Wow! All of you have been so helpful! I did ask my attorney about the reason for the W-9 but she responded that they probably needed it for the "forgiveness of the debt" this really annoyed me. The debt was not forgiven, they tried to sue me and they lost. I don't trust Fredrick Hanna and I just feel that he is up to something.

I did call the IRS and asked them about the need to fill out a W-9 for reimbursement of attorney fees and the agent that I spoke to confirmed that since it was just a reimbursement that there was no need for the w-9. She also told me that under the circumstances if I did fill out the W-9 that there would be a 1099 issued. She suggested that my attorney approach them for something in writing indicating why they need the form.

If I refuse to fill out the W-9 can they refuse to issue me a check? If they refuse to issue the check wouldn't they be in violation of a court order? This is crazy! Just when I thought all of this was behind me.....

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sat, 24 Jan 2009 02:39:20 GMT

I am not an attorney but I can give an opinion.

There is no requirement for the W-9 to get reimbursed for the attorney fees and, like you, I do not think they can require you to sign a W-9 to get those fees. If your attorney is not helpful, call the clerks office at the court house to see what the procedures are to get the money.

On the other hand, even though the debt was not technically forgiven, such as in a settlement, Cap One does have the right to file a 1099-C on the debt, even though they sued you and lost. For this the W-9 is required.

This came directly from the W-9:

Penalties
Failure to furnish TIN. If you fail to furnish

your correct TIN to a requester, you are

subject to a penalty of $50 for each such

failure unless your failure is due to

reasonable cause and not to willful neglect

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sat, 24 Jan 2009 07:34:07 GMT

I would ask your attorney to tell the other side to pay or file a garnishment writ with the court. If Cap 1 wants your info for a 1099, they should dig out of their vaults. The law firm that passed the request to sign the W9 should be found in contempt of court.

Or, if Crap1 is reporting, they should agree to full forfeiture (no one can ever claim it again) and remove the tradeline forever from your credit reports in return for the W-9....

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sat, 24 Jan 2009 18:17:30 GMT

Even if we are to assume a 1099-C is to be issued, it would come from Capital One, not the attorneys. Capital One already knows what the social number is, and quite honestly the attorneys have no need to know.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sat, 24 Jan 2009 18:23:18 GMT

guiness56, you're off base here. The W-9 is not required. A W-9 is needed when YOU DON'T KNOW what the social number is, usually in the context of payments to contractors and occasionally for payments to attorneys. Cap One already knows the number, and it was certified in the application process for the original debt.

Put in another context for analogy purposes, my company actually gets 1099-MISC every year DESPITE the fact that law and instructions for the form are quite explicit in that you don't issue them to corporations except in very very limited instances. Why do we get them? The people preparing them are ignorant and/or can't be bothered to read the very simple instructions.

I'm a manager at a tax firm, trust me when I tell you this is a case of ignorance, not compliance.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sat, 24 Jan 2009 23:02:40 GMT

SDDave: You have your opinion and I have mine. And the fact that you work in a tax firm....?

According to the IRS web site a 1099-C is used to report expired SOL debt. They must ensure they have the correct TIN, that is why the W-9 is issued.

Look it up.

Message Edited by guiness56 on 01-24-2009 03:02 PM

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sun, 25 Jan 2009 01:52:32 GMT

the attorneys didn't ask the W9 to process a 1099. The attorneys asked the W9 to process the attorney fees - that's should be contempt of court, for trying to impose additional conditions on a sentence.

if, separately from paying the attorney fees that are due because of a sentence, Crap1 wants ALSO to forgive the debt, they should state so, and it's a totally different matter - the two issues are not related and should not be tied together.

Re: I won my countersuit against Cap 1 for attorneys fees but they want me to fill out a W-9?

Anonymous — Sun, 25 Jan 2009 03:35:20 GMT

guiness56, I have the facts and you have your opinion. Let me spell it out for you: If the attorneys feel the need to get a signed W-9 for any reason whatsoever, they are incompetent. Do you mean to tell me that whatever reason they claim to be issuing a 1099 for, at no point in their files do they have anything from their client that shows that social number? Let's assume they they weren't also the CA, because then it would be beyond pathetic. One last time. If they don't have it, they're pathetic because they should. If they do have it, they're being pricks practicing CYA.

And oh by the way, its generally common practice at law firms to get Tax IDs on everyone for 1099s...WHETHER OR NOT THEY ARE REQUIRED. Why? They are too lazy to do their jobs right.

Sometimes, a modicum of common sense needs to rear its head.

Message Edited by SDDave on 01-24-2009 07:35 PM