1099s Required for Fantasy Sports Prizes (Private League)?

Posted by Michael on October 27, 2009, 5:56 pm

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The organizers of a Fantasy Baseball League (private parties, not CBS
Sportsline type league) are CPAs. League has been in existence for
many (10+) years.

Each year they pay out (based on various methods of funding the
winner's pool) prizes to the Top 3 finishers in the League. First
place prizes run between $1,500 and 2,000. Third Place is usually
closer to $400-$650 (on average) each year.

They resist/ignore requests for "how did you compute the prize pool"
basically indicating members do not even have a right to ask. Members
should just "trust them" because they are "The Commissioners". No
accountings are provided.

1009s have never been issued by them (they totally control the
operation of this League).

Do these CPAs and organizers of this Fantasy Baseball League have any
exposure, with a Federal or State authority (taxing, or other
regulatory/investigatory and/or with the governing body for
accountants) on any level for their adamant failures to issue 1099s or
for any other aspect of this operation/association?

Sounds trivial but there is decent $ involved, I have numerous
complaints/concerns, but don't know all the ramifications, if any. Can
this be reported to State Accounting Boards?

Guidance appreciated (especially from by-the book accountants).

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Posted by nish on October 29, 2009, 10:10 am

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> The organizers of a Fantasy Baseball League (private parties, not CBS

> Sportsline type league) are CPAs. League has been in existence for

> many (10+) years.

> Each year they pay out (based on various methods of funding the

> winner's pool) prizes to the Top 3 finishers in the League. First

> place prizes run between $1,500 and 2,000. Third Place is usually

> closer to $400-$650 (on average) each year.

> They resist/ignore requests for "how did you compute the prize pool"

> basically indicating members do not even have a right to ask. Members

> should just "trust them" because they are "The Commissioners". No

> accountings are provided.

> 1009s have never been issued by them (they totally control the

> operation of this League).

There are many different issues raised by your post, but as far as I
understand it, the liability in not filing a 1099 consists of two parts:

1) There is a small $50 to $100 penalty per 1099 they fail to file.

2) They have liability to pay taxes on any 1099 income they failed to
report. And as I understand it the IRS may put the burden of proof on the
business that failed to report the income to prove the tax was paid. In a
situation like what you describe the business might not get cooperation of
the people it pays to show their tax returns, so they would be in a tough
spot.

If you are paying a parent or friend or close business associate, and you
know for sure that a) the tax due is going to get paid and b) that the party
in question would be fully cooperative with you later on in proving that the
tax was paid, then maybe you could have minimal liability in failing to file
the 1099. If you are paying substantial amounts to strangers, why would
you take on that liability for their tax bill?

nish

> Do these CPAs and organizers of this Fantasy Baseball League have any

> exposure, with a Federal or State authority (taxing, or other

> regulatory/investigatory and/or with the governing body for

> accountants) on any level for their adamant failures to issue 1099s or

> for any other aspect of this operation/association?

> Sounds trivial but there is decent $ involved, I have numerous

> complaints/concerns, but don't know all the ramifications, if any. Can

> this be reported to State Accounting Boards?

> Guidance appreciated (especially from by-the book accountants).

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by HLunsford on October 29, 2009, 3:49 pm

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nish wrote:

>> The organizers of a Fantasy Baseball League (private parties, not CBS

>> Sportsline type league) are CPAs. League has been in existence for

>> many (10+) years.

>> Each year they pay out (based on various methods of funding the

>> winner's pool) prizes to the Top 3 finishers in the League. First

>> place prizes run between $1,500 and 2,000. Third Place is usually

>> closer to $400-$650 (on average) each year.

>> They resist/ignore requests for "how did you compute the prize pool"

>> basically indicating members do not even have a right to ask. Members

>> should just "trust them" because they are "The Commissioners". No

>> accountings are provided.

>> 1009s have never been issued by them (they totally control the

>> operation of this League).

> There are many different issues raised by your post, but as far as I

> understand it, the liability in not filing a 1099 consists of two parts:

(balance snipped.)

Here we have a private club who choose their own members. It is not a
trade or business, hence no 1099's need be issued.

The fact that they are CPA's doesn't matter, and a complaint to state
accountancy board will get no where.

ChEAr$,
Harlan Lunsford, EA n LA

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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Bob Sandler on October 29, 2009, 9:39 pm

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HLunsford wrote:

>Here we have a private club who choose their own members. It is not a

>trade or business, hence no 1099's need be issued.

I don't think that's so clear. The OP said that they are
secretive about how they calculate the prize amounts, so it
is possible that the organizers are making a profit. If
that's the case, it's a business.

Bob Sandler

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Posted by HLunsford on October 30, 2009, 12:38 pm

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Bob Sandler wrote:

> HLunsford wrote:

>> Here we have a private club who choose their own members. It is not a

>> trade or business, hence no 1099's need be issued.

> I don't think that's so clear. The OP said that they are

> secretive about how they calculate the prize amounts, so it

> is possible that the organizers are making a profit. If

> that's the case, it's a business.

> Bob Sandler

yes, very well could be. I'm guessing that they've no EIN, though.

C$,
HL

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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