Tax bill for an account I don’t know by the IRS every year

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MichaelPalmer
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Tax bill for an account I don’t know by the IRS every year

Post by MichaelPalmer » Sat Mar 24, 2018 9:12 am

Hello all,

Long time lurker, but first time poster. My issue is a little complex to explain. For the past two years I’ve received a notice from the IRS saying that I haven’t paid taxes on capital gains of an account reported under my Social Security number by Smith Barney.

The IRS has given me the account number and the name of the organization it belongs to. I contacted the owner of the company and he gave me his representatives email. The representative keeps telling me that there’s nothing wrong on their end and I need to take it up with the IRS. The IRS is telling me that I need to take it up with the bank since I have the account number and my Social Security number. I have tried to take it up with several people at Smith Barney, but have had no success. This wouldn’t be that big of a deal, if they didn’t go through my entire return every time. I’m a teacher, and I’m in grad school. They constantly are asking for proof of my grad school now. Sending my 1098T each year is proving annoying.

Does anyone have any ideas what else I can do to get Smith Barney to actually listen to me? Or any ideas about how we can clear this up with the IRS? Each year and put on hold for two hours while it is resolved and I feel powerless.

Thanks for all the wisdom on the forum and hopefully someone can help me.

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CAsage
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Re: Tax bill for an account I don’t know by the IRS every year

Post by CAsage » Sat Mar 24, 2018 12:46 pm

Confusing. An organization that isn't you is using your SSN to report income? I would be much more worried about how they got that, what else they are using it for.... If it's your number (but not your name?) raise heck with Smith Barney. Try their fraud department, and see if you can get copies of those account statements (hey, it's either yours and you can or it's not and they need to fix it). And run your credit reports and freeze everything so that there aren't more of those. Money laundering? Strange.
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123
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Re: Tax bill for an account I don’t know by the IRS every year

Post by 123 » Sat Mar 24, 2018 1:07 pm

You've got a number of options as I see it. You could contact Smith Barney and ask them to send the statements for your assets to you. You could also ask Smith Barney to close the account and send the proceeds to you (that likely will really stir things up).

Do you have any relatives (maybe even deceased), including parents/grandparents, who may have opened an account on your behalf at some point in the past? Do you have relatives that you know of that have done business with Smith Barney?

If it was my money and it was at Smith Barney I would have two thoughts. 1.) There is probably not an "incidental" balance in account and 2.) there is likely an AUM fee eating into the assets every month/day/year.

What is the name of the organization that the account at Smith Barney belongs to? Perhaps that would give some clues about what is going on.

If you are not successfully resolving this on friendly terms with the organization holding the account you should likely file written complaints for identity theft with the IRS against the organization using your SSN as well as with the SEC for Smith Barney misusing your SSN.

One way or another you can get to the bottom of this.

Edited to add:

Write a letter and send it certified to the Director of Compliance at Smith Barney regarding the misuse of your SSN. That should generate a response that resolves the matter.
Last edited by 123 on Sat Mar 24, 2018 1:19 pm, edited 2 times in total.
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livesoft
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Re: Tax bill for an account I don’t know by the IRS every year

Post by livesoft » Sat Mar 24, 2018 1:09 pm

Did your parents or other relative open an account with you as the primary owner / beneficiary and they did not tell you about it? They may have also instructed the brokerage firm not to tell you anything about it as well.

On bogleheads.org we have seen many instances where parents started UGMA / UTMA accounts for their child and never told the child about it. Then when the child reaches the age of majority revelations come to light. Or maybe the parents didn't start UGMA accounts, but simply put the child's name and SSN on an account.

Sure, you wrote "organization", but so what? Why not try to withdraw all the money? Or submit a change of address request?
Last edited by livesoft on Sat Mar 24, 2018 1:11 pm, edited 1 time in total.
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Mike Scott
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Re: Tax bill for an account I don’t know by the IRS every year

Post by Mike Scott » Sat Mar 24, 2018 1:10 pm

Were you the beneficiary of an account you did not know about or something? Is it fraud? I would pester them until they provided enough information to know whether this is legitimate or fraudulent.

123
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Re: Tax bill for an account I don’t know by the IRS every year

Post by 123 » Sat Mar 24, 2018 1:17 pm

You might want to mention the problem with the IRS to your parents (if you haven't already), watch the expression on their faces, and see what kind of response they make.
The closest helping hand is at the end of your own arm.

Mudpuppy
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Re: Tax bill for an account I don’t know by the IRS every year

Post by Mudpuppy » Sat Mar 24, 2018 1:47 pm

MichaelPalmer wrote:
Sat Mar 24, 2018 9:12 am
The IRS has given me the account number and the name of the organization it belongs to. I contacted the owner of the company and he gave me his representatives email. The representative keeps telling me that there’s nothing wrong on their end and I need to take it up with the IRS. The IRS is telling me that I need to take it up with the bank since I have the account number and my Social Security number. I have tried to take it up with several people at Smith Barney, but have had no success. This wouldn’t be that big of a deal, if they didn’t go through my entire return every time. I’m a teacher, and I’m in grad school. They constantly are asking for proof of my grad school now. Sending my 1098T each year is proving annoying.
What specifically have you done to "take it up" with Smith Barney? We can't give you good advice on how to change your approach until we know what your current approach is. For example, if you have already asked Smith Barney for proof that the account exists under your SSN and they have refused to provide it, it might be worth the retainer fee to hire an attorney to send an appropriately worded letter to Smith Barney. But if you haven't even gotten to the point of demanding proof that there is an account under your SSN at Smith Barney, then it would be better to start there.

MichaelPalmer
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Re: Tax bill for an account I don’t know by the IRS every year

Post by MichaelPalmer » Sat Mar 24, 2018 2:08 pm

Thanks for all the responses.

The IRS on the phone gave me the name of an LLC in the city where I live. I have contacted them, and they asked for my SS number. I wouldn't provide it. I called the 1-800 number for Smith Barney Morgan Stanley and they gave me the branch.

The first year I wrote Smith Barney they wrote:
They would have it fixed in their system.

This year they wrote:
This is being researched from various angles internally though nothing has been identified at this time.
In the interim I’m sure your tax advisor will help you respond to the IRS appropriately in writing as the form you shared suggests.

XXXX, CFP®, CIMA®, Vice President
Senior Investment Management Consultant
Financial Advisor
Morgan Stanley Wealth Management
1290 Avenue of the Americas, 13th Floor | New York, NY 10104
Phone: 212-492-6752 | Fax: 646-588-0458
NMLS ID 1278983

I'm trying to keep everything in writing so that I have proof.

The women from the IRS on the phone said this would keep happening unless I did something about this. I have tried e-mailing and tweeting Smith Barney. I have attempted to go in person. They say that my name is not on the account therefore I can't see the balance or take our any money. This has just been a nightmare to attempt to fix.

Mudpuppy
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Re: Tax bill for an account I don’t know by the IRS every year

Post by Mudpuppy » Sat Mar 24, 2018 3:07 pm

MichaelPalmer wrote:
Sat Mar 24, 2018 2:08 pm
The women from the IRS on the phone said this would keep happening unless I did something about this. I have tried e-mailing and tweeting Smith Barney. I have attempted to go in person. They say that my name is not on the account therefore I can't see the balance or take our any money. This has just been a nightmare to attempt to fix.
Just because your name is not on the account does not mean your SSN is not on the account. You said you did not give your SSN to the local company that the IRS directed you towards, but did you provide your SSN to Smith Barney directly?

You need to provide your SSN to Smith Barney so they can determine if this is a case of name/SSN mismatch. This could be anything from a data entry error on their part to fraud on the part of the customer. As long as you are legitimately contacting Smith Barney using verified contact information for their corporation, you should not worry too much about giving them your SSN. They'll need that information to do a proper investigation into the account.

123
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Re: Tax bill for an account I don’t know by the IRS every year

Post by 123 » Sat Mar 24, 2018 3:27 pm

It might be a good idea to check your credit reports as well for any accounts you are not familiar with.
The closest helping hand is at the end of your own arm.

JBTX
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Re: Tax bill for an account I don’t know by the IRS every year

Post by JBTX » Sat Mar 24, 2018 4:01 pm

MichaelPalmer wrote:
Sat Mar 24, 2018 2:08 pm
Thanks for all the responses.

The IRS on the phone gave me the name of an LLC in the city where I live. I have contacted them, and they asked for my SS number. I wouldn't provide it. I called the 1-800 number for Smith Barney Morgan Stanley and they gave me the branch.

The first year I wrote Smith Barney they wrote:
They would have it fixed in their system.

This year they wrote:
This is being researched from various angles internally though nothing has been identified at this time.
In the interim I’m sure your tax advisor will help you respond to the IRS appropriately in writing as the form you shared suggests.

XXXX, CFP®, CIMA®, Vice President
Senior Investment Management Consultant
Financial Advisor
Morgan Stanley Wealth Management
1290 Avenue of the Americas, 13th Floor | New York, NY 10104
Phone: 212-492-6752 | Fax: 646-588-0458
NMLS ID 1278983

I'm trying to keep everything in writing so that I have proof.

The women from the IRS on the phone said this would keep happening unless I did something about this. I have tried e-mailing and tweeting Smith Barney. I have attempted to go in person. They say that my name is not on the account therefore I can't see the balance or take our any money. This has just been a nightmare to attempt to fix.
The guy who wrote that is a CFP and an account manager. He doesn’t have a clue. I might try several angles:

- Try to contact Morgan Stanley fraud dept and the legal depts.
- call customer service and give them the account number and social security number. See if they give you info on the account. They probably won’t if you can’t provide personal information or answer security questions. Ask to speak to a manager and explain the situation and see where it goes. Don’t give up. If they can’t help you ask to speak to somebody at a higher level.
- if above is fruitless getting an attorney to write a letter may get something done.

straws46
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Re: Tax bill for an account I don’t know by the IRS every year

Post by straws46 » Sat Mar 24, 2018 4:51 pm

Sole owner LLCs are disregarded entities for IRS purposes, so they use the social of the sole member. Sounds like a simple case of entering the wrong number. The compliance department of Smith Barney should help you if you can get to them.

dknightd
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Re: Tax bill for an account I don’t know by the IRS every year

Post by dknightd » Sat Mar 24, 2018 5:06 pm

That sucks! Setting up a paper trail is a good idea. I guess since this the second year you know how to deal with IRS. So the next step is to make sure it does not happen again next year. You have already written Morgan Stanley, and they said (in writing) they would correct the problem. Maybe they will. I'd call them in a month. Call the guy who wrote you. Ask about the status. If it has been resolved ask them to confirm in writing. If it has not been resolved ask why not, and work your way up the chain.

How much money are you apparently not earning? If Morgan Stanley has been notified they are using an incorrect SS# on an account, and they continue to do it, I assume there is some legal recourse you could take against them (or their client). Hopefully it never reaches that stage.

Likely a clerical error. Which they should correct. But as somebody else suggested, it might be a good idea to check your credit reports for other unusual activity. A good thing to do every once in a while anyway!

Edit. If it has not been resolved in a few months I'd call my state attorney generals office. Fraudulent use of somebodies SS# is a criminal offense. I'm assuming the LLC is not connected to you, or somebody you know.

Silk McCue
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Re: Tax bill for an account I don’t know by the IRS every year

Post by Silk McCue » Sat Mar 24, 2018 5:31 pm

I concur with others that you should contact the Smith Barney fraud department. I would start out by saying that you are a victim of identity theft as you have been notified by the IRS that an account is reporting to them on your Social Security Number and you don’t have an account with them. Don’t suggest that it could be someone’s simple typo on a form or during data input. Just stick with the identity theft angle. It’s all about your messaging and urgency to get this resolved as you are very concerned that you are at risk of a fraudster.

A little drama can go a long way if you focus them on the urgency of this matter.

Cheers

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celia
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Re: Tax bill for an account I don’t know by the IRS every year

Post by celia » Sat Mar 24, 2018 6:38 pm

The above are all good ideas, but I would act as if it was Identify Theft.

If someone intentionally stole your SSN and used it for financial transactions, wouldn't you notify the IRS? Who knows--maybe the LLC picked a random SSN to avoid taxes! I would report it as such to the IRS, especially using a form. Once they receive the form they have to do something with it. I think the IRS is partly responsible for this problem, since they can see a mismatch between the name and SSN and have done nothing about it. Keep calling it "Identity Theft" when talking to the IRS.

https://www.irs.gov/identity-theft-frau ... protection

Do this in addition to the Smith Barney route you are pursuing.

CedarWaxWing
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Re: Tax bill for an account I don’t know by the IRS every year

Post by CedarWaxWing » Sat Mar 24, 2018 8:59 pm

I would consider it likely that either SB or the IRS has had an error in their records. One of them is not doing their job properly.

Having done what you can, I would also consider writing a letter to both the IRS and SB, noting the names and numbers of the people at SB that you have tried to resolve this with, and sending that letter to the IRS, and SB... i.e. to each of the contacts you have hand interactions with in regards to this.

CC should be send to the SEC and your state's appropriate regulatory agency, and your attorney if you have one, and your tax person, especially if that person is a CPA.

I would precede the letter with calls to the fraud office at SB, as has already been suggested, and a call to the CEO and CFO of SB... and include their names in the letter. After all you have been through, I would ask the CEO and or CFO to acknowledge your calls in writing with a plan as to when and how this will be resolved. You might get lucky before the need to write a letter.

Also let them know you will be contacting the Washington Post and the NYtimes if this is not resolved within 30 days.

Over kill? Not considering the you did not cause this, and you are the only one actually trying to get it resolved properly.

Best

M

Buford T Justice
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Re: Tax bill for an account I don’t know by the IRS every year

Post by Buford T Justice » Sun Mar 25, 2018 12:33 pm

Good advice above and I believe its a definite violation of FINRA rules (See FINRA Regulatory Notice 11-02), specifically SB's "know you Customer" responsibilities.

Maybe threaten them with invoking arbitration over your time, accountants time and cost for letters to IRS, etc. and see what happens?

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dodecahedron
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Re: Tax bill for an account I don’t know by the IRS every year

Post by dodecahedron » Sun Mar 25, 2018 2:44 pm

celia wrote:
Sat Mar 24, 2018 6:38 pm
The above are all good ideas, but I would act as if it was Identify Theft.

If someone intentionally stole your SSN and used it for financial transactions, wouldn't you notify the IRS? Who knows--maybe the LLC picked a random SSN to avoid taxes!
I don't think there's SSN stealing going on here.

The tax ID number for an LLC would generally be an EIN, a 9 digit number assigned by the IRS with the format XX-XXXXXXX.

The problem is that SSNs also have nine digits, but formatted differently XXX-XX-XXXX.

Further problem, as I understand it, is that EINs and SSNs can overlap. That is, the same 9 digit sequence can be used both by an individual as their SSN and by a (completely unrelated) business entity as their EIN.

My guess is that the LLC was issued the same 9 digit character string for its EIN as the string for the OP's SSN and then someone somewhere accidentally did not check the right box (for EIN vs SSN) when creating a data file for the organization.

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celia
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Re: Tax bill for an account I don’t know by the IRS every year

Post by celia » Tue Mar 27, 2018 2:26 am

The IRS also has a department called the Taxpayer Advocate Service.
I'll bet they've heard of this kind of problem before and might be able to intervene on your behalf.

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dodecahedron
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Re: Tax bill for an account I don’t know by the IRS every year

Post by dodecahedron » Tue Mar 27, 2018 3:14 am

straws46 wrote:
Sat Mar 24, 2018 4:51 pm
Sole owner LLCs are disregarded entities for IRS purposes, so they use the social of the sole member.
Yes, a sole owner single member LLC can elect to be a disregarded entity for IRS purposes, but this does not necessarily mean that single member LLCs use the SSN of the owner. A disregarded entity reports profits on a Schedule C (or Schedule C-EZ), Schedule E, or Schedule F as well as a Schedule SE attached to their 1040 individual tax returns, but such disregarded entities may still need to obtain and use an EIN, for example, if the sole owner single member LLC has employees. The IRS specifically states:
IRS wrote:Taxpayer Identification Number
For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or EIN for all information returns and reporting related to income tax. For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number and Certification, the W-9 should provide the owner’s SSN or EIN, not the LLC’s EIN.

However, for certain Employment Tax and Excise Tax requirements discussed below, the EIN of the LLC must be used instead. Therefore, an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Thus, most new single-member LLCs classified as disregarded entities will need to obtain an EIN. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number. See Form SS-4 for information on applying for an EIN.

A single-member LLC that is a disregarded entity that does not have employees and does not have an excise tax liability does not need an EIN. It should use the name and TIN of the single member owner for federal tax purposes. However, if a single-member LLC, whose taxable income and loss will be reported by the single member owner, nevertheless needs an EIN to open a bank account or if state tax law requires the single-member LLC to have a federal EIN, then the LLC can apply for and obtain an EIN.
Note that the Schedule C-EZ, Schedule C, and Schedule F all have fields for reporting the owner's EIN. (If the individual owner has an EIN, it goes on line D on each of those forms.) If a sole proprietor business has an EIN, many banks will want the owner to use the EIN in setting up the account. Bank of America, for example, required my late husband's sole proprietorship to set up the business bank account under his EIN, not his SSN.

RetiredAL
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Re: Tax bill for an account I don’t know by the IRS every year

Post by RetiredAL » Tue Mar 27, 2018 10:38 am

dodecahedron wrote:
Sun Mar 25, 2018 2:44 pm

I don't think there's SSN stealing going on here.

The tax ID number for an LLC would generally be an EIN, a 9 digit number assigned by the IRS with the format XX-XXXXXXX.

The problem is that SSNs also have nine digits, but formatted differently XXX-XX-XXXX.

Further problem, as I understand it, is that EINs and SSNs can overlap. That is, the same 9 digit sequence can be used both by an individual as their SSN and by a (completely unrelated) business entity as their EIN.

My guess is that the LLC was issued the same 9 digit character string for its EIN as the string for the OP's SSN and then someone somewhere accidentally did not check the right box (for EIN vs SSN) when creating a data file for the organization.
Many years ago (25+) my dad opened two accounts at Schwab. Somewhere along the line, they entered his exact SS # in EIN sequence xx-xxxxxxx instead of SS sequence of xxx-xx-xxxx. A few year ago when, I started supervising his finances, I noticed this. Schwab did not seems surprised or concerned, and said they can only change this by creating new accounts. We did not. His tax CPA was not concerned. The IRS has never challenged any of his returns.

Thus, I've come to the conclusion that IRS systems likely only looks at the Taxpayer ID as a 9 digit number sans the dashes.

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dodecahedron
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Re: Tax bill for an account I don’t know by the IRS every year

Post by dodecahedron » Tue Mar 27, 2018 12:49 pm

RetiredAL wrote:
Tue Mar 27, 2018 10:38 am

Many years ago (25+) my dad opened two accounts at Schwab. Somewhere along the line, they entered his exact SS # in EIN sequence xx-xxxxxxx instead of SS sequence of xxx-xx-xxxx. A few year ago when, I started supervising his finances, I noticed this. Schwab did not seems surprised or concerned, and said they can only change this by creating new accounts. We did not. His tax CPA was not concerned. The IRS has never challenged any of his returns.

Thus, I've come to the conclusion that IRS systems likely only looks at the Taxpayer ID as a 9 digit number sans the dashes.
It may not be a concern *most of the time* and perhaps it was no problem in your dad's case but it sounds like there is some potential for overlap with the same 9 digit number used in both ways. FWIW, the IRS specifically asks the taxpayer to check on Form 2441 whether the 9 digit string you are inputting for a daycare provider is an SSN or an EIN.

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