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Rivertime

Is Midland Pulling Something, They Want A W-9, California

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Well, hello all once again. 

 

After much wrangling with the courts, I finally got my Judgment Of Dismissal against Midland funding signed and filed.  It is a little over $550.00.  Here’s the rub, I sent them a demand letter outlining how expensive it would be for them if I had to pursue collection actions and demanded they paid within 10 days.  I just got a letter from them stating, and I quote, “We are in receipt of your request for funds owed you.  We require a W-9 form to be completed so we may correctly remit the funds with our booking department.”  Then they go on and talk about how the W-9 form is enclosed, fill it out, blah, blah, blah.

 

Am I required to complete a W-9 to get reimbursed for court costs?  Or is this some trick to get all my relevant info so they can file a W-9 against me for the amount of the suit they just lost.

 

Any help, guidance, and info would be much appreciated.

 

Thanks,

 

rd

 

 

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Do not fool with them, file an order to show cause with the court that gave you the judgment. Let the court tell them they do not need a w-9, they are just stalling.

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River,

 

If you have reviewed the form, what information on the form is something they don't already have?

 

Point is they likely have all the information being requested, so what are they getting that is new?

 

Send them the form and get your payment, then if you need to go back to court you are compliant with the simple request they made for information they already have in their file....

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Get an EIN from the IRS and use that... that's worked fine for me in the past. 

 

 

Plus, funds from judgments are generally tax-free, so make sure you keep the paperwork.

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The funds received from a judgment are 'usually' tax free in the event the funds are awarded to reimburse the taxpayer the funds they lost as a result of the defendants actions. So, if the judgment was from costs awarded (from a MOC for example) then they are likely not considered income.

Why not just call your tax professional and determine your responsibilities in the eyes of the law?

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bring them in for a judgment- debtor exam. I would not send them the w-9 it is not required and they will use the information they gain to sell the debt saying it has good documentation. also when they send the check cash it at their bank so they cannot collect your bank information.

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A big thank you to all those who responded to this thread, I really do appreciate it.

 

The judgment I have is for the recovery of cost incurred by me in fighting the suit Midland filed against me.  I won the case in that I was able to get it dismissed WITH prejudice, so there is really nothing legitimate for them to sell.  I just don’t trust these guys farther than I can throw them.  I’m in the middle of drafting a letter to them stating I’m not, have not and will never be an employee, contractor, or service provider to Midland and the amount at issue is not over $600.00 (the IRS tax code threshold for requiring a W-9) anyway so go pound sand and drop a couple name of their corporate officers I will be subpoenaing for a debtors exam. 

 

I guess I need to remind them once again that THEY are responsible for ALL additional expenses incurred in the collection of the judgment.  Gunny’s advice might be a good first shot across the bow because it will cost about $80.00 to file the order.  But then again, Seadragon and the debtor’s exam could also be fun and expensive…

 

Thanks again to everyone, I’ll make sure to let everyone know how it turns out,

 

rd

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The funds received from a judgment are 'usually' tax free in the event the funds are awarded to reimburse the taxpayer the funds they lost as a result of the defendants actions. So, if the judgment was from costs awarded (from a MOC for example) then they are likely not considered income.

Why not just call your tax professional and determine your responsibilities in the eyes of the law?

I hate to burst your bubble but fee that are awarded to a litigant for a suit are considered income to the IRS,yes I know it sucks, all the w-9 does it collect your information, name address, and ssn, it is required by the IRS for the payment of income. This will also allow them to send you a 1099-MISC. It is only 500 buck so it should not hurt you that bad when you file taxes. They are attempting to treat you as an employee, when you are not.

 

I would send them a letter that states you are not one of their employees, and they are attempting to make you pay taxes on the money. It is not required that you fill out a w-9, other than it may be a company rule, but it is not an IRS mandate or regulation.

 

So with the problem of collection agencies using the w-9 and the 1099c, what the Gunny has started doing is sending them, if they win their suit, or send me a dunn letter, a w-9 and/or a 1099c or MISc. They are required, the same as you are, to pay taxes on earnings. I also send that 1099c/MISC to the IRS.

 

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@BTO429 even if it is a refund of their costs, and not income? That doesn't seem right if I have to spend 500.00 to fight a suit they brought, that I would have to pay taxes on money I am just being refunded so to speak.

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I hate to burst your bubble but fee that are awarded to a litigant for a suit are considered income to the IRS,yes I know it sucks, all the w-9 does it collect your information, name address, and ssn, it is required by the IRS for the payment of income. This will also allow them to send you a 1099-MISC. It is only 500 buck so it should not hurt you that bad when you file taxes. They are attempting to treat you as an employee, when you are not.

 

I would send them a letter that states you are not one of their employees, and they are attempting to make you pay taxes on the money. It is not required that you fill out a w-9, other than it may be a company rule, but it is not an IRS mandate or regulation.

 

So with the problem of collection agencies using the w-9 and the 1099c, what the Gunny has started doing is sending them, if they win their suit, or send me a dunn letter, a w-9 and/or a 1099c or MISc. They are required, the same as you are, to pay taxes on earnings. I also send that 1099c/MISC to the IRS.

 

@Rivertime

They are attempting to treat you as a vendor for tax purposes, not as an employee.  If they were treating you as an "employee" they would ask you to complete a W-4 and issue you a W-2, not a 1099.  I wouldn't send them a letter stating anything making reference to them treating you as an employee.  And as you said, the IRS threshold for them to be required to send you a 1099 is $600, and this is below that.  They are within their power to issue you a vendor check without a W-9.  They are just being difficult. 

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THEY ARE DONIG

 

@Rivertime

They are attempting to treat you as a vendor for tax purposes, not as an employee.  If they were treating you as an "employee" they would ask you to complete a W-4 and issue you a W-2, not a 1099.  I wouldn't send them a letter stating anything making reference to them treating you as an employee.  And as you said, the IRS threshold for them to be required to send you a 1099 is $600, and this is below that.  They are within their power to issue you a vendor check without a W-9.  They are just being difficult. 

THEY ARE DOING JUST THIS.  But you do not need to send them a w-9.....tell them to go pound sand. File a motion for a debtors exam and when you find their bank account info file an order to freeze assets. I would also file a lien on their business. attach everything you can and they will pay, plus interest.

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First off, if you win a judgement, anything beyond actual damages or costs is considered taxable. The $1000 for FDCPA violation or $1500 TCPA violation or any punitive damages is part of the taxable income. Actual damages are not taxable unless you deducted said damages in a prior year.

However, as BTO says, you are not required to fill out a W9 in order to collect on a judgement. If that were the case, then anyone could get out of paying a judgement simply by demanding such (could you imagine debtors who do get judgements against them doing this). What I would do is send the form back with a letter stating that the law does not require you to fill out the form and you consider them stalling on the payment of a valid judgement and will take action as such. Then take such action such as a debtors exam or even taking some furniture and office equipment.

Remember though, you still have to pay taxes on the amount that was not actual damages in the year you collect (unless you are an accrual taxpayer but that is a different discussion all together).

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Unless I'm misunderstanding the OP, he filed a motion to dismiss Midland's case against his, won, and was possibly awarded costs (although he doesn't say if the judge specified the costs). 

 

Now he's trying to recoup his costs.  I know a debtor's exam can be requested if you win a judgment.  But I don't know that being awarded costs when a case is dismissed is the same thing. 

 

Hopefully, @calawyer will pop in.

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If the OP was awarded costs after filing an MC-010 and got it turned into a judgment, then the OP becomes the judgment-creditor.

 

The OP can petition for a debtors exam or if Midland's bank accounts are known, seek a writ to levy the account for costs. Then no W-9 foolishness. 

 

Getting a judgment is one thing... collecting it is another. 

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I have to disagree with you BV80. I feel that costs are a judgement for the party whose costs were rewarded to. Otherwise, how can the court enforce a loser pay type system that obtaining costs imply. Not only that, but court costs are actual damages and hence, not even taxable under current law hence the W9 form is not only needed but is being used to cause issues that do not exist and possible damage to the other party by making pay taxes on money that is not taxable income. One would also think that an organization like Midland Funding would know this because of the amount of judgements in their favor that include costs and I bet they pay no taxes on any of the cost awards.

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@1stStep

 

 

If the OP was awarded costs after filing an MC-010 and got it turned into a judgment, then the OP becomes the judgment-creditor.

 

The OP can petition for a debtors exam or if Midland's bank accounts are known, seek a writ to levy the account for costs. Then no W-9 foolishness. 

 

Getting a judgment is one thing... collecting it is another. 

 

That makes sense.  

 

As far as a W-9 is concerned,  it has to do with taxes, and I don't see how it applies to recouping court costs.

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I'm not really a tax expert, but generally (stressing this big time), proceeds from judgments are not subject to taxes... as always, you'd have to consult a CPA/EA/tax attorney to be sure

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I hate to burst your bubble but fee that are awarded to a litigant for a suit are considered income to the IRS,yes I know it sucks, all the w-9 does it collect your information, name address, and ssn, it is required by the IRS for the payment of income.

 

Fees and costs are two completely different animals.  An award of costs is, by definition, a reimbursement of amounts you paid to the court or third parties in connection with the litigation.  I am not a tax expert either but I do not see how costs can possibly be considered "income".

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@calawyer

 

I like that.  A JDB sues but ends up being the one undergoing a debtor's exam.  Poetic justice.  :-)

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Midland is trying to stall by saying the need the tax information which they do not. If we tried that with them when they have a judgement against us, would they fill it out? Of course not, they would simply start grabbing for assets. Therefore, treat them the same way.

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