Issuing a 1099 to an escort

[BaronArtz]

There is an escort here in NY whom I have seen a very often this year. I have paid him cash initially. As our business relationship grew, I paid him via weekly check, into this LLC. Should I issue him a 1099 for the total amount of 'consulting fees'? Has anybody issued an IRS Form 1099s to escorts? It would help my tax situation a lot. For him, of course, it would be a tax liability. It could get a bit touchy - he told me he hasn't paid any taxes yet on his 2O15 income.

 

I apologize if this was already discussed elsewhere on this forum.

[Kevin Slater]

So as long as you hired him in a personal capacity and not part of your business, there's no need to file a 1099. That he runs an LLC has no bearing. Your expense was a personal one, not a business expense.

 

Kevin Slater

[jackjackjack]

There is an escort here in NY whom I have seen a very often this year. I have paid him cash initially. As our business relationship grew, I paid him via weekly check, into this LLC. Should I issue him a 1099 for the total amount of 'consulting fees'? Has anybody issued an IRS Form 1099s to escorts? It would help my tax situation a lot. For him, of course, it would be a tax liability. It could get a bit touchy - he told me he hasn't paid any taxes yet on his 2O15 income.

 

I apologize if this was already discussed elsewhere on this forum.

 

Not sure how it will help YOUR tax situation.

 

But him....

If the person has a single member LLC and is taxed as a corporation, then you do not have to issue the LLC a 1099 MISC. If the LLC has multiple members and is not taxed as a corporation, the LLC is taxed as a partnership. You do need to issue the LLC a1099 MISC.Jan 3, 2013

[craigville beach]

normally the purchase of goods and services is not a reportable event. You don't issue a 1099 when you purchase groceries or if the plumber comes to your house to fix a pipe (no pun intended). Even if you were any type of a corporation, you don't issue a 1099 when you purchase photo copy paper, or engage a contractor to replace your roof.

[jackjackjack]

So as long as you hired him in a personal capacity and not part of your business, there's no need to file a 1099. That he runs an LLC has no bearing. Your expense was a personal one, not a business expense.

 

Kevin Slater

 

What do you regard as 'hiring in a personal capacity?'

[jackjackjack]

normally the purchase of goods and services is not a reportable event. You don't issue a 1099 when you purchase groceries or if the plumber comes to your house to fix a pipe (no pun intended). Even if you were any type of a corporation, you don't issue a 1099 when you purchase photo copy paper, or engage a contractor to replace your roof.

 

If you purchase goods and services as a reseller, it is not taxsble.

[jawjateck]

Does "into this LLC" mean "into his LLC"?

[craigville beach]

if hire a cleaning service to clean you business at the end of every day, is this a "personal service". If you hire someone to come in a wine the grandfather clock in your business, isn't this a personal service. neither would require a 1099

[stop]

the LLC is a red hearing so to speak with this issue. His company status is irrelevant. As Mr Slater pointed out, if you made payment on personal level then you should not issue a 1099. Now if a company made the purchase then they would be required to issue a 1099.

 

If you had a LLC that cut the checks to his LLC, then that may be a different story all together....but YOU then would probably have a bigger issue with the IRS if they audited your accounts.

[jackjackjack]

if hire a cleaning service to clean you business at the end of every day, is this a "personal service". If you hire someone to come in a wine the grandfather clock in your business, isn't this a personal service. neither would require a 1099

It's a business expense for your business and you should take a tax deduction. Whether you issue a 1099 or even withholding SS taxes depends on how you consider the cleaning service. ...just 1 person business or part of a company. I'm certainly not a tax consultant and with the tax code being roughly over 70,000 pages, it's overwhelming.

[jackjackjack]

the LLC is a red hearing so to speak with this issue. His company status is irrelevant. As Mr Slater pointed out, if you made payment on personal level then you should not issue a 1099. Now if a company made the purchase then they would be required to issue a 1099.

 

If you had a LLC that cut the checks to his LLC, then that may be a different story all together....but YOU then would probably have a bigger issue with the IRS if they audited your accounts.

 

What is a 'personal level?' Thats what I'm trying to figure out. Thx

[down_to_business]

Consult a professional tax advisor and not an anonymous message board, please!

[+ quoththeraven]

DTB is right. Nevertheless, as a former IRS lawyer, I will say:

 

1. Hiring an escort is an inherently personal transaction. He has income but you don't have a deduction. All you've done is spend money on personal services. Would you issue a 1099 to an attorney, doctor, or (non-erotic) massage therapist? No. Why would (or should) this be any different?

2. Kevin Slater generally knows what he's talking about when it comes to tax issues.

[BaronArtz]

Thank you, everybody, for the valuable feedback. I am not a LLC, I am a sole proprietor. The escort established a LLC to receive his escort fee payments and income from other consulting services. As a sole proprietor, commissions paid, fees to accountants and lawyers, etc. are legitimate business expenses. I hired this person as a 'business consultant'. Therefore, it is beneficial to me to use these fees as business deductions. I should have clarified that.

[rguer]

What if you get audited and they ask to see evidence of his consulting work?

 

It sounds like you're asking how to cheat on your taxes while also exposing someone else to an audit. Is it really worth the money you might save?

[+ saminseattle]

I’m not an accountant or tax lawyer, but I’m fairly certain the IRS would look into these “business consulting” services if you were audited to see if they were legitimate and customary in your trade. Something like, “My work is stressful, so I hired him as a ‘consultant’ to help relieve the stress” probably wouldn’t cut it. On the other hand, if your business is analyzing stocks, and he has a computer degree and developed a software program to help your analysis, that would be a different matter. My point is that the government won’t hesitate to look behind whatever labels people use to try to determine what is really going on. And if it’s all on the up-and-up, you shouldn’t be shy about consulting a professional. Indeed, you could probably deduct the cost of the consultation.

[Kuriousity]

You said "weekly check". Does this mean you have him on an established retainer? If so, then the IRS might view his relation to you as a contract employee. Consult an accountant who is not shockable and discuss the matter to see what your legal obligations are. Now, does his job description go beyond Dirty Dirty Nasty Nasty? If it does, then perhaps you can gloss over the escort side completely.

[marylander1940]

There is an escort here in NY whom I have seen a very often this year. I have paid him cash initially. As our business relationship grew, I paid him via weekly check, into this LLC. Should I issue him a 1099 for the total amount of 'consulting fees'? Has anybody issued an IRS Form 1099s to escorts? It would help my tax situation a lot. For him, of course, it would be a tax liability. It could get a bit touchy - he told me he hasn't paid any taxes yet on his 2O15 income.

 

I apologize if this was already discussed elsewhere on this forum.

 

No I haven't done that but I knew a Virginia escort who asked his regulars to hire him as a "Personal Trainer"... I guess in your case is "consulting fees".

 

I’m not an accountant or tax lawyer, but I’m fairly certain the IRS would look into these “business consulting” services if you were audited to see if they were legitimate and customary in your trade. Something like, “My work is stressful, so I hired him as a ‘consultant’ to help relieve the stress” probably wouldn’t cut it. On the other hand, if your business is analyzing stocks, and he has a computer degree and developed a software program to help your analysis, that would be a different matter. My point is that the government won’t hesitate to look behind whatever labels people use to try to determine what is really going on. And if it’s all on the up-and-up, you shouldn’t be shy about consulting a professional. Indeed, you could probably deduct the cost of the consultation.

 

The escort could also throw the OP (and others) under the bus if he gets in trouble with the cops... In this town, and I'm sure in others, there's a whole industry of finding out other folks skeletons in the closet, and use them as a bargain chip in case of running into any kind of trouble.

 

A friend of mine just went through an ugly divorce and told me "... if he (his former) husband hadn't given me half the house I would have downloaded child porno in his computer and call the cops on him, also based that as a reason for me to sue for divorce". Fortunately he never did it, his husband gave him half the house...

 

We keep talking about CC and PayPal but when it comes to this kind of businesses just pay cash and use other ways of payments for other things.

 

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