On the IRS website, it lists a chart with questions that determine if you need an "Employer's Identification Number" or not. Here is the chart. I am not seeing where the average mystery shopper fits into this area. Anyone filing a Schedule C on their income tax return is not filing a Business Tax Return as this is considered a personal income tax form by the IRS.

Do you have employees?
YES NO

Do you operate your business as a corporation or a partnership?
YES NO

Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
YES NO

Do you withhold taxes on income, other than wages, paid to a non-resident alien?
YES NO

Do you have a Keogh plan?
YES NO

Are you involved with any of the following types of organizations?

Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
Estates
Real estate mortgage investment conduits
Non-profit organizations
Farmers' cooperatives
Plan administrators
YES NO

check below, double post.
LisaSTL Wrote:
-------------------------------------------------------
> Actually it is specifically an EIN that they are
> requiring and an SSN is no longer adequate. Anyone
> who doesn't comply by May 1 will have their
> accounts frozen.



Edited 1 time(s). Last edit at 03/18/2012 03:49PM by Irene_L.A..

Correct post by the incomperable LISASTL.....they have a few jobs near me I want to do and was required to get an EIN#, I did and am offered those jobs. they are going fast, so, many (47%) have signed up for this. I will keep you guys posted as to how the checks arrive. I am assuming my business name will be on them along with my name, and I'll have to add that to my bank account. You need a business license to get this EIN#, which I have. I fought it, but
gave in....I surrender am going along with the program, whatever!!
LisaSTL Wrote:
-------------------------------------------------------
> Actually it is specifically an EIN that they are
> requiring and an SSN is no longer adequate. Anyone
> who doesn't comply by May 1 will have their
> accounts frozen.

dcshopper Wrote:
-------------------------------------------------------
The way I see it is the government will now know we are not paying taxes on most of the money we make.

DC - The government can already see if taxes are not being paid on money earned. This is not actually permanently hidden from them, but temporarily undiscovered. The MSC will claim an expense deduction for money paid out to mystery shoppers. If the MSC is audited, this money can be tracked to the individual recipients.

Mystery shopping generates very little, if any, taxable income if all legal deductions (including mileage) are taken. However, failure to report could result in penalties and multiple audits of previous years' returns.



Edited 1 time(s). Last edit at 03/18/2012 04:31PM by MDavisnowell.

A shopper either DOES or DOES NOT pay taxes on their income, whether it is by EIN or SSN. The company DOES claim what they pay to shoppers on THEIR tax return as an expense that is fully auditable by IRS. If a shopper chooses to not pay taxes on their income, it is fraudulent behavior, whether it is under an EIN or a SSN and subject to IRS action.

Under old IRS rules, a business is required to issue a 1099 for payments commissions, fees and other compensation in excess of $600. Reimbursements are not considered to be compensation. Under the rules starting in 2012, (from accountingweb.com)

"First Change: Payments to Corporations Must Be Reported. Starting in 2012, if your business pays a corporation $600 or more in a calendar year, you must report the total amount on an information return. Presumably, Form 1099-MISC will be used for this purpose, or the IRS will develop a new form. (Payments to corporations that are tax-exempt organizations will be exempt from this new requirement.)

Another burden: Your business must also obtain a TIN from each affected payee to avoid the requirement for backup withholding of federal income tax.

On the other side of the coin, if your business sells property or you operate a corporate business, you will have to supply customers with your TIN to avoid backup withholding on payments made to you.

Third Change: Payments of "Gross Proceeds" Must Be Reported. Here's where the new upcoming rules get more confusing. Under a third new rule that will take effect in 2012, payments of $600 or more in "gross proceeds" to a payee in a calendar year must be reported on an information return. At this point, it is unclear what this new reporting requirement is meant to cover. The best guess is that it is meant to cover payments made to non-corporate payees, such as restaurants and other small businesses. We are awaiting IRS clarification on this issue.

Action Plan

Dealing with the new Form 1099 reporting rules is going to be difficult for many organizations -- resulting in an avalanche of paperwork. Your business will likely have to modify its accounting procedures to capture payee information that will be needed to comply with the new requirements.

Remember: TINs must be obtained from your vendors to avoid having to institute backup federal income tax withholding on payments made to them. By the same token, your business must ensure that your customers have your TIN to avoid backup withholding on payments made to you.

What if backup withholding does occur on payments made to you? You must be prepared to track the withheld amounts so you can claim credit for them at tax return time. If your business winds up on either side of the backup withholding rules, it can be a real mess. And with lots more 1099s flying around, the odds of errors rise proportionately.

To compound the problems with the new reporting requirements, many businesses use accounting methods other than the cash basis. In addition, a number of businesses file their returns using reporting periods other than calendar years. In an audit, imagine your business and the IRS attempting to reconcile 1099s with these complications.

Fortunately, the new Form 1099 reporting rules (including any backup withholding implications) don't cover payments made before 2012. So there's still plenty of time to plan for what is likely to be a daunting task…use it wisely!"

As an independent contractor I would be super cautious about setting up an EIN business because I would certainly hate to need to collect TINs from the restaurants and stores I shop and am reimbursed for on the chance that I pay them more than $600 in a calendar year and need to start issuing 1099s!

Of course a "valid TIN" is simply a valid Taxpayer Identification Number and that can be a SSN or an EIN.

I signed up for two pizza shops in April. Told the kids and husband to enjoy, because these would be the last. I guess we will now have to start collecting pizza coupons.

Still not gonna get an EIN.

lisams901 Wrote:
-------------------------------------------------------
> Is Trendsource now requiring an EIN?
>
> When I logged in just now I had a message at the
> top saying they still need an EIN from me. This is
> the first I've heard it mentioned by them and
> can't find anything on the site about it being
> required.


I sent a message to Trendsource telling them if they required an EIN I would no longer do jobs for them. I paid for the background check last year so I could do inspections that pay more than shops. They are easy and the amount it cost was worth it especially if you are in a metro area where there would be a lot of them. But I got a message back saying that they would terminate anyone that did not have an EIN when the requirement date came around! Maritz tried this last year but backed out at the last minute and never brought it up again. We'll see; if they lose their IC base they'll be in dire straits.

I sent a message to Trendsource telling them if they required an EIN I would no longer do jobs for them. I paid for the background check last year so I could do inspections that pay more than shops. They are easy and the amount it cost was worth it especially if you are in a metro area where there would be a lot of them. But I got a message back saying that they would terminate anyone that did not have an EIN when the requirement date came around! Maritz tried this last year but backed out at the last minute and never brought it up again. We'll see; if they lose their IC base they'll be in dire straits.

Holding out for the dire straits!

It is my understanding the federal government is requiring this for those who make over the $600 level for reporting purposes. The government wants a peice of the 10 we make for doing a bestbuy. Really

tmdudley Wrote:
-------------------------------------------------------
> It is my understanding the federal government is
> requiring this for those who make over the $600
> level for reporting purposes. The government
> wants a peice of the 10 we make for doing a
> bestbuy. Really


Sorry, not according to the IRS.

Can you tell us your source of information? Thank you.

Income is income and taxed regardless. Why are people acting like an EIN means they just now have to pay?

LisaSTL Wrote:
-------------------------------------------------------
> Income is income and taxed regardless. Why are
> people acting like an EIN means they just now have
> to pay?


People are active on this topic for several reasons, I think.

1) A MSP is requiring it to continue with them (loving those pizzas, I guess),

2) Many of us don't have an EIN and getting one raises concerns regarding consequences (New requirements, demands, etc.) that may make it not worth it for some of us,

3) The way the MSP presented it - to the effect the laws have changed, so they need an EIN now - when the law has in fact not changed. This situation has created confusion and even mistrust with the MSP.


So, what do we do? The only thing I can suggest that works for everyone is to be informed. If you are considering getting an EIN just for this MSP, check with the IRS website or your accountant to reach an informed decision as to how getting an EIN affects you.

Good luck.

You did not read my previous posts because I am one of those who is opposed due to a long list of regulations I would have to comply with outside of taxes. My concern with some of the postings are people implying they do not pay taxes on their income and one which implied that most mystery shoppers don't report their income and/or don't have to report it if they keep their income from any individual company under $600. By that way of thinking we could each work for 100 companies and make $599 from each company and not be liable for taxes on a yearly income of $59,900!

I only pray I could make 59,000 a year, I would gladly pay taxes.

I sent this message to them today:

The SSN is a perfectly acceptable method under which an individual contractor files taxes. I do not employ anyone else, nor do I intend to, so I have absolutely no intention of filing for an EIN (EMPLOYER identification number). I hope, like Maritz, you decide to discontinue this policy. I would love to continue taking shops but will not be able to do do unless you go back to accepting an SSN.

Too little too late (above post), they have started this project and for some reason are 100% committed to it, your post is just your post...they have their own agenda.

They may still change their mind. For them - Money Drives Everything...:p

Maritz was pretty committed to it as well.......but the plan derailed somehow...............

Flash Wrote:
>
> And I can open as many EINs as I might wish. In
> fact I could name one for each goat in the
> barn--Claire's Shopping, Danny's Services, DeDe's
> Delights, etc. Since each EIN and associated name
> would be unique, I could have a registration in
> each and defeat both rotations and 1099s.

What a devious mind! lol
I am concerned that they are trying to get compliant with some up and coming law...

The point, Elise, is that if this were an issue of 'being responsible' to make sure we paid our taxes, there are more options to defraud by EINs than there are by SSNs. The change in law that is occurring requires that businesses who pay more than $600 to some other business must send the selling business a 1099. Of course they are already doing that when they send a 1099 to our SSN when we have done more than $600 in fees.

The big difference for us using an EIN vs an SSN is that we will need to deal with any local, county, state or federal regulations or fees or reporting that are required of a business rather than a free lance independent contractor.

There are no advantages to the shopper of an EIN unless you decide to become a LLC or other corporate entity that allows you to limit the liability of your 'company' to 'company' assets and shelter personal assets. That might be something to consider if I were doing lots of integrity shops where people were likely to be fired for dishonesty based on my reports, but I don't do those types of shops. That might even be smart with Trendsource and their BV shops now that their 'background check' and 'certification' represent that the shopper has some sort of expertise rather than being a man-on-the-street impression of whether a business is real.

The accountingweb.com article I quoted above also raises some interesting questions. As an individual I can pay a grocery store $1800 per year in purchases with no issues. As a shopper and individual I can do $1800 per year in reimbused purchases from that store with no issues. As a business, if I buy more than $600 per year from a vendor, the new laws would imply that I need to 1099 them. The grocery stores I shop are all part of a chain wholly owned by the same company and very likely are operating under the same TIN. Since I potentially could have $1800 in groceries reimbursed by shops with them in a calendar year, as a business I probably should have their TIN or plan to do withholding at the cash register. Can you imagine the confusion of the cashier when I indicated I wouldn't pay my entire bill because I needed to do withholding on them that they could recapture when they paid their taxes?

The same would hold true of restaurants I frequently shop. Some are franchises so would have TINs for each location while some are corporately owned so are likely to have a single TIN for all of their locations. I guess I would need to ask for a TIN at each location where I am likely to spend more than $600 per year in the chain just in case they have different TINs. So much for being a covert mystery shopper.

Hotel shops? Better get a TIN unless they are backing out the folio from your credit card.

Luckily the front end of the business version of TurboTax allows you to create and send 1099s. And by the way, I hope you are proficient at accounting because your 1099s need to be sent out fairly early in the year and there are penalties for each one for which a corrected 1099 must subsequently be sent. So either you will be visiting your accountant a couple of times rather than just once to prepare your return or you will be busy at home.

I intend to email them the list of questions on the IRS website itself, which determine if an EIN is needed and then ask them,based on the IRS itself, how they can require us to have one?? It's just ludicrous and I mean that in the full sense of the word - foolish, unreasonable, and out of place.

Any updates on this? They just sent me an offer of $45 plus reimbursement to buy a sandwich in a town 15 miles down the road - sounded desperate. I let them know that I haven't decided yet whether or not to get an EIN so I won't take shops until I make that decision.

I wonder if they'll have enough folks holding out that they change their requirement.

Take it. This doesn't go into effect for another month

Unfortunately kalfini, I only recently signed up with them so I fall under the "new shopper" category. I don't even know if I'll get paid for the shops I've already done.

their not the only ones who have the pizza shops. They have about half of them, and then another company has half, some overlap the same locations. All the same restaurant.

I told them that I do not intend getting an EIN so they said that they will have to terminate the relationship and I agreed.
My account was closed.
I am happy about that and would never

I told them that I do not intend getting an EIN so they said that they will have to terminate the relationship and I agreed.
My account was closed.
I am happy about that and would never step back.

I believe the demand for an EIN and the bidding for shops are related. I think once they get EINs for everyone then they will start the bidding on shops across the board. They will claim they are subcontracting to the lowest business bidder (i.e. you) and therefore aren't responsible for any paperwork or any requirements regarding whether their work qualifies as independent contracting work. They will claim that is the responsibility of "the business" they subcontracted to (i.e. you) and the IRS needs to contact you about those concerns. This is trouble I don't want.

Edited 1 time(s). Last edit at 04/01/2012 12:14AM by redhead5.

Hmmmm Redhead5, this very well could be. Very insightful.

Still not getting one!