My bank has put a hold on my account and they want me to provide proof that I have a legitimate business. As an independent contractor, most of the documents they listed do not apply. I don't have a corporation or DBA. I was told that a signed contract would fulfill the requirement. They also mentioned an FOS but could not explain what that is.

So. Has anyone deal with this before? Is an e-signed document enough? Are MSC agreements private? What can I do?

Um....change banks?

Or provide last year's tax return with schedule C, "self-employment income".

Or your EIN.

However, if they are asking because you deposited a certified check, they may just be taking good care of you -- those certified checks/money orders, where you're supposed to take the $$$ and buy gift cards are SCAMS.

(Yes, ICAs are confidential.)

Edited 1 time(s). Last edit at 01/27/2021 06:14PM by ceasesmith.

@ceasesmith wrote:

Um....change banks?

Or provide last year's tax return with schedule C, "self-employment income".

Or your EIN.

However, if they are asking because you deposited a certified check, they may just be taking good care of you -- those certified checks/money orders, where you're supposed to take the $$$ and buy gift cards are SCAMS.

(Yes, ICAs are confidential.)

I can't change banks because they are put a hold on my account. I received a grant via electronic deposit from the SBA. Six months ago. It is fortunate that nothing else was in that account at the time the hold was triggered. Still hurts.

Aha. They are searching for fraud on those grants.

You'll have to provide the proof. Don't you have tax returns? You've been shopping long enough to have filed tax returns. Fraud investigations are RIGID.

My fallback will be to submit my tax return and a written statement explaining that my contracts are private. I just want this to go as smoothly as possible. If I can give them a thing from their official list, my hope is that will be processed more quickly.

I was very lucky even to reach someone. I have dealt with a lot of dropped calls. Took four tries today.

After six months of trying.

@ceasesmith wrote:

Aha. They are searching for fraud on those grants.

You'll have to provide the proof. Don't you have tax returns? You've been shopping long enough to have filed tax returns. Fraud investigations are RIGID.

Sure but what fraud are they responsible to investigate? I already provided what was required by the SBA. The bank has zero interest in the money.

Scammers who got the money but shouldn't have.

A lot of Nigerian scams. Same as with unemployment insurance pay outs. Billions went to people who didn't have businesses, etc.

I read an on-line article from Nigeria about college students there raking in $50,000 a WEEK in unemployment and SBA grants. All they needed was a name, address, social security number. Sickening. So then they just impersonate a business or person, and get the funds.

@1cent wrote:

@ceasesmith wrote:

Aha. They are searching for fraud on those grants.

You'll have to provide the proof. Don't you have tax returns? You've been shopping long enough to have filed tax returns. Fraud investigations are RIGID.

Sure but what fraud are they responsible to investigate? I already provided what was required by the SBA. The bank has zero interest in the money.

The Feds are investigating fraud on the PPP loan/grant program. If you claimed “employees” that you don’t have, if you claimed a loan that you weren’t actually eligible for... you’re in trouble.

My HOA Property Management Company claimed a $350,000 PPP loan/grant in April 2020. Their assets have been frozen by the Feds, because they claimed 19 employees but in reality only have four, all of them family members. It’s kind of wonderful to see, they were turned in for fraud by over a dozen people in my neighborhood.

No government agency is asking for additional documentation. This is the bank’s action.

These anecdotes highlight the problem with my case. None of those scenarios apply.

Edited 1 time(s). Last edit at 01/27/2021 07:42PM by 1cent.

Anyway, I still have some hope of receiving useful advice from someone who has dealt with this personally as an IC. There’s no value to imagining that I might be a Nigerian prince or have fraudulently claimed to have employees.

It bothers me that the person I finally reached at the bank was only able to read off a list. I can’t see if their internal document is listing examples or exactly what is needed. Contracts are often confidential. Most IC workers can’t get letters from a company to verify the relationship. So I find it odd that the bank rep asked for a contract and did not ask for my tax documents.

I won’t get into every detail, but the bank gets no credit from me. It’s a ridiculous situation.

Mystery shopping companies pushed for people to work under an EIN to make sure they weren't responsible for taxes, unemployment, medical ins. etc. It doesn't have anything with hiring you as a business. An IC agreement is not a business contract. It all comes down to taxes: do you pay personal income tax or business tax?

I searched: What is the difference between self employed and small business?

The biggest difference between Self-Employed and Small Business is that Self-Employed individuals ARE THE BUSINESS and Small Business Owners RUN THEIR BUSINESS.

A self-employed person is not often the same thing as being a business owner. The owner of a business, for instance, may hire employees and essentially become the boss—an employee-owner who operates and manages the business.

Alternatively, a business owner has an ownership stake but may not be involved in the day-to-day operations of the company. In contrast, a person who is self-employed both owns the business and is also the primary or sole operator. The taxation rules that apply to those who are self-employed differ from the employee or a business owner.

I use my SSN and have never gotten an EIN and if you've done the same, maybe getting an EIN would help.

The should accept your Schedule C and 1040 tax returns. You are a business owner. End of story.

Jasper, welcome to the forum.

But I must, most respectfully, disagree with you.

An EIN is an EMPLOYER IDENTIFICATION NUMBER. When we issue 1099s to the entities or individuals we have paid during the year (those not on regular payroll), the EIN goes on the 1099 to identify US as the paying entity.. When we submit our payroll taxes quarterly for those employees on our payroll, the EIN is our identification number on those returns.

That's why I mentioned that EIN might be proof to the bank.

I have been a self-employed small business owner for years, issuing both 1099s and W-2s.

Edited 2 time(s). Last edit at 01/27/2021 10:56PM by ceasesmith.

Was your account hacked? Did someone, somehow, gain access to your login information and go rooting around in your information? Did you ever use your phone or other device where someone could watch? If you have a bank debit or charge card, could it have been skimmed and did some unauthorized or suspicious use of this card trigger a hold and investigation?

When my hubby started to "help" an extremely demanding individual by sending money in various forms, all sorts of issues popped up with all his accounts. Several times, even my cards have been skimmed. I had to replace them, and the investigations revealed fraud. I suspect but cannot prove that the individual's demands for hubby to send money from certain places at certain times placed him where any cards he or I had could be skimmed by a confederate. Am I paranoid? Or, have I had enough of this individual and a long string of fraudulent actions against me? *note to self: replace the expensive but good card carried that blocks skiiming, asap*

Hindsight is perfect. I share this so that perhaps your own search through memory can dislodge something that you can share with your bank. If you can provide something that helps their investigation, things will go better with you at the bank. Fraud is rampant and was made worse by the covid situation. All you can do is your best. I hope something will shake loose and improve your situation.

@1cent wrote:

No government agency is asking for additional documentation. This is the bank’s action.

These anecdotes highlight the problem with my case. None of those scenarios apply.

If you made a deposit over $5,000 then it’s the BSA not the SBA that’s involved.

@SoCalMama wrote:

If you made a deposit over $5,000 then it’s the BSA not the SBA that’s involved.

Right, except that I have found other people online who have encountered this exact problem after receiving a deposit from the SBA to personal accounts. All of these people work as independent contractors and are being asked to provide documents related to their business. The source of the deposit has not been questioned. Much larger deposits well ahead of this were not questioned and still are not being questioned.

I guess I should read up on the BSA anyway. Perhaps you're right that this is related to their concern. It is just frustrating that no one at the bank has been able to provide much info. Even inasmuch as their security procedures might be confidential, I should have received a letter to inform me of the issue and clear guidance about how to comply. Instead, I have had to deal with telephone agents who were barely able to read information to me, much less answer simple questions.

Edited 1 time(s). Last edit at 01/29/2021 04:36PM by 1cent.

@1cent wrote:

@SoCalMama wrote:

If you made a deposit over $5,000 then it’s the BSA not the SBA that’s involved.

Right, except that I have found other people online who have encountered this exact problem after receiving a deposit from the SBA to personal accounts. All of these people work as independent contractors and are being asked to provide documents related to their business. The source of the deposit has not been questioned. Much larger deposits well ahead of this were not questioned and still are not being questioned.

I guess I should read up on the BSA anyway. Perhaps you're right that this is related to their concern. It is just frustrating that no one at the bank has been able to provide much info. Even inasmuch as their security procedures might be confidential, I should have received a letter to inform me of the issue and clear guidance about how to comply. Instead, I have had to deal with telephone agents who were barely able to read information to me, much less answer simple questions.

I have two checking accounts with two different banks.
Bank #1 took over $200,000 (total) from overseas wire transfers into my account and said nothing.
Bank #2 took only one $25,000 overseas wire transfer and flipped out. They talked about possibly locking my accounts, etc. I remember her telling me on the phone, "We had to report this to BSA."
So, if possible, go into your bank and discuss it with a manager, not a teller making $15/hour.
It is quite possible that if your information is vague (I was listed as "homemaker" on my documents), they are making sure that I was not laundering money or working with international "T". They want to know what you do such that anyone is making large deposits into your bank.

Oh, I'd flip on ANY MSC if they were talking about locking my accounts. I'd sing like a song bird.

Edited 1 time(s). Last edit at 01/29/2021 06:11PM by SoCalMama.

Old tax forms should work. Oh and I would also contact the local medias helpline.

I requested an EIN from the Feds and opened a DBA (Doing Business As) account because of similar issues, about 6 or 7 years ago, when I began working for myself full-time instead of part-time. Do you have any of your 1099's that you received last year? Providing them, along with a print out of 2018 or 2019 taxes, should be enough.

@1cent wrote:

@ceasesmith wrote:

Aha. They are searching for fraud on those grants.

You'll have to provide the proof. Don't you have tax returns? You've been shopping long enough to have filed tax returns. Fraud investigations are RIGID.

Sure but what fraud are they responsible to investigate? I already provided what was required by the SBA. The bank has zero interest in the money.

Just show your Schedule C and/or an invoice, basically what you provided to the SBA when you applied for the PPP and/or EIDL. What’s the big deal?

@2stepps wrote:

Old tax forms should work. Oh and I would also contact the local medias helpline.

I did that. Also dropped a note to my member of congress. The "big deal" someone else asked about is that the bank has not been communicating and I don't really trust that the documents I sent will be processed in a careful or timely way.

@Mressler82 wrote:

I requested an EIN from the Feds and opened a DBA (Doing Business As) account because of similar issues, about 6 or 7 years ago, when I began working for myself full-time instead of part-time. Do you have any of your 1099's that you received last year? Providing them, along with a print out of 2018 or 2019 taxes, should be enough.

I sent the fax last week. I hope that is enough. I had been planning to change my status this year so that I could open a business account, among other considerations. I know some people have set up S-corps but I haven't yet decided what is best for me.

BSA = Bank Secrecy Act. The laws require banks to "know your customer" and imposes stiff fines for noncompliance.

If you opened a personal account and deposited paychecks from an ordinary job, then suddenly have a large sum deposited, alarm bells go off at the bank. But usually they investigate in a competent manner, unlike what you are describing.

After doing what you need to do to get your account unblocked, it's time to find another bank. Do a few bank shops to search for a new bank and get paid for it.

@Susan L. wrote:

BSA = Bank Secrecy Act. The laws require banks to "know your customer" and imposes stiff fines for noncompliance.

If you opened a personal account and deposited paychecks from an ordinary job, then suddenly have a large sum deposited, alarm bells go off at the bank. But usually they investigate in a competent manner, unlike what you are describing.

After doing what you need to do to get your account unblocked, it's time to find another bank. Do a few bank shops to search for a new bank and get paid for it.

My bank in question put the MSC as my employer. I just found this out last week when I closed a CD and opened a new one. I was signing the forms and right there as my employer it said, "Name of MSC" (which wired ~$25,000 from a Swiss Bank to me). Ugh. I had them pull that off and put my lab employer there.