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!

 

[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 many︀ thousands and 50k among many millions of spendings. But if they do full transactions export︁ 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]

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

1. Do I understand correctly︀ that for the US company that's not a problem even if that gets revealed? I︁ 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 and︃ send to authorities all the transactions from their bank account? If they report totals︄ - then chances it gets revealed are really low - 10-20 transactions among many thousands︅ and 50k among many millions of spendings. But if they do full transactions export and︆ 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 much︇ 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