Providing another person's bank account in invoice, consequences?

[zillerberg]

Hi,


A question about invoices sent to US companies.

Assume Alice is a contingent worker for US based company J&J. What could happen if Alice sent an invoice to J&J, but in that invoice Alice gives bank account of her friend Bob (account name = Bob). Both Bob and Alice are citizens of Russia. Only Alice has a work contract with J&J and gave them W8 form.

I understand that is not a good idea, but what are the consequences both for Alice and J&J? Would that be a problem for J&J as a company? Is Alice allowed to give bank account with name not equal to Alice at all, if not - does anyone check that? Let's skip the part how Bob receives the money, let's assume that's not a problem.

Thank you in advance!

 

[NicolasMaduro]

Interesting. I dont see how that should be any issue for the company. Its an issue for the person receiving the money as I think the bank prefers that the bank account is used by the account holder only but Hopefully there is someone with more knowledge who knows the answer

 

[JohnLocke]

It's an mismatch and as such not legal in the tax authorities eyes, for sure.

That said, it depends on the number of invoices and the amounts - most often such thing would just pass through and only be detected in an audit or other cases where someone looks into the transaction history for the bank account.

Today's rules are that you can't receive any amount or send any amount which you can't document otherwise it will be money laundering which is illegal in most countries.

Welcome to the new era of the EUSSR as some call it around here!

Toggle signature

>> Unlock the Power of OffshoreCorpTalk: Become a Member of the Mentor Group Gold <<​

Latest Video Interviews, Offshore Company Resources, Payment Processing Tips & Tricks, Articles and Anonymity Hints only a click away!
Support the Freedom of Speech of our Community

Disclaimer: Nothing I say should be taken as tax, legal or financial advice. Anything I say is for general informational purposes only. Always seek independent professional advice.​

 

[zillerberg]

@Admin,

Thank you for reply!
Just a couple of related questions:

1. Do I understand correctly that for the US company that's not a problem even if that gets revealed? I assume they can always show invoices from Alice and say that it's Alice's fault - they simply sent the money to whatever account Alice gave them in invoice. Correct?

2. Do companies in US report only the totals for income/spendings? Or do they export and send to authorities all the transactions from their bank account? If they report totals - then chances it gets revealed are really low - 10-20 transactions among many thousands and 50k among many millions of spendings. But if they do full transactions export and send it to tax authorities - then a very simple check could find that.
So, do companies in general report all individual transactions to tax authorities?

 

[zillerberg]

@community,
any information regarding what is reported automatically to tax authorities in US by a LLC (total income/spendings vs all transactions for account, see my previous question (2))?

 

[zillerberg]

Admin said:
It's an mismatch and as such not legal in the tax authorities eyes, for sure.

That said, it depends on the number of invoices and the amounts - most often such thing would just pass through and only be detected in an audit or other cases where someone looks into the transaction history for the bank account.

Today's rules are that you can't receive any amount or send any amount which you can't document otherwise it will be money laundering which is illegal in most countries.

Welcome to the new era of the EUSSR as some call it around here!
Click to expand...

Thank you for reply!
Just a couple of related questions:

1. Do I understand correctly that for the US company that's not a problem even if that gets revealed? I assume they can always show invoices from Alice and say that it's Alice's fault - they simply sent the money to whatever account Alice gave them in invoice. Correct?

2. Do companies in US report only the totals for income/spendings? Or do they export and send to authorities all the transactions from their bank account? If they report totals - then chances it gets revealed are really low - 10-20 transactions among many thousands and 50k among many millions of spendings. But if they do full transactions export and send it to tax authorities - then a very simple check could find that.
So, do companies in general report all individual transactions to tax authorities?

Thank you very much in advance for clarification!

 

[newNomad]

Nobody knows?
In EUSSR they were reporting only totals, but gradually moving toward reporting all individual - so called electronic invoicing so the taxman has access to all the invoices of the unsuspecting biz owner