Does the title company need my SSN to close???

19 Replies

I will be closing on a house within the upcoming days. The title company asked me for my SSN,which raised a red flag. Why do i need to provide my SSN if I am buying the house cash. It dosent make sense. I am domiciled in East Baton Rouge Parish in the state of Louisiana.

There is generally two reasons. First for IRS reporting of transactions, the need your SSN so they can file form 1099-S. Secondly for compliance with Foreign Investments in Real Property Tax Act (FIRPTA). Essentially to see if you are citizen.

Is there some reason you are not just providing this? 

Red flag? This should not be considered a red flag.

While it is important to handle your SSN with care, I believe you can trust a title company to handle your SSN responsibly. If there were no record of what you paid for the property that was kept track of by your SSN, how would there be any way of knowing how much, if any, taxes are owed, if you sell the property? When you report the sale and your tax preparer calculates the profit or loss, it's all kept track of by your SSN or the tax ID number of your entity (LLC, S-Corp, etc.), if you aren't buying in your own name.

@Russell Brazil I bought the property cash from the owner. No financing i didn’t need to provide my SSN. My lawyer got both parties to sign the cash sale and recorded it with the clerk of court and assessors office. I dont think that particular title company i was trying to use knew what they were doing, or maybe it was just a mis-understanding. Either way i ran for the hills and still got the deal done.

@Timothy Winfield You should self report the sale to the IRS then if the title company failed to do so. Better safe than sorry when dealing with the IRS.

Lots of government boot lockers. There is a difference between “have to” supply and “SHOULD have to” supply. 

No. The government shouldn’t be in so much of our damn business. I track every penny in and out and pay appropriate taxes. So it drives me nuts when I have to give my social to some organization that’s paying tenant rent. Or even my social to get a property tax refund or money out of the court registry.  

@Chris Mason Agreed....but most of my purchases have been without a loan and I only Recall  having to supply a SS# when selling.....but many of those were QCD’s executed at my attorney’s office, not traditional “closings”.

Originally posted by @Wayne Brooks :

@Chris Mason Agreed....but most of my purchases have been without a loan and I only Recall  having to supply a SS# when selling.....but many of those were QCD’s executed at my attorney’s office, not traditional “closings”.

cASh buyer i have never given it.. or can remember being asked  seller for sure .. ssn  or EIN

Originally posted by @Jay Hinrichs :
Originally posted by @Wayne Brooks:

@Chris Mason Agreed....but most of my purchases have been without a loan and I only Recall  having to supply a SS# when selling.....but many of those were QCD’s executed at my attorney’s office, not traditional “closings”.

cASh buyer i have never given it.. or can remember being asked  seller for sure .. ssn  or EIN

Given what I do for a living, honestly I'd have no reason to be familiar with the regulations/laws/requirements that go away when there isn't a federally regulated mortgage involved. :)

Actually, now that I think of it... yeah, I do know just a little. BP and REI-unrelated, iIt's a slight "problem" for journalists trying to understand the scope and magnitude of foreigners buying US real estate. Demographic and nationality information from homebuyers comes mostly from HMDA data. No mortgage = no HMDA = no idea who is buying it. Low income single white woman, or razorback little green man from mars? No way to know. So, yeah, I guess it's consistent with you folks saying that as cash buyers SSN isn't needed.

Register of Deeds requires Buyer's SSN (and obviously Seller's) when recording the Deed in my municipality. Title company handles recording, so SSNs have to be provided to title company here.

Originally posted by @Cody L. :

Lots of government boot lockers. There is a difference between “have to” supply and “SHOULD have to” supply. 

No. The government shouldn’t be in so much of our damn business. I track every penny in and out and pay appropriate taxes. So it drives me nuts when I have to give my social to some organization that’s paying tenant rent. Or even my social to get a property tax refund or money out of the court registry.  

I am not questioning that you do the right thing, but small business tax fraud is a very serious problem. If there was no system to track accountability, it would be far worse. When one person doesn't pay taxes, it just means the rest of us pay more. 

There is also people who unintentionally commit tax fraud. Just reading the forums, I continually run into people who have no understanding of tax requirements for real estate or rental properties. People tell them to get an accountant and they complain it costs too much. There is books out there that spell it our in detail, but some people just refuse to learn the proper way to run a business.

So between the people intentionally not paying taxes and those doing it out of ignorance, that is why big brother is making all of us report.

Even as a landlord you should be getting social security number of un-incorporated subcontractors and sending them 1099 when you hit certain spend thresholds. This is why the rent payment agencies send to you, because it is the law. Many of these "low cost" contractors reduce costs by not paying taxes (or not being insured, bonded or licensed). Tell someone you are going to 1099 them and magically your price goes up...

Originally posted by @Joe Splitrock :
Originally posted by @Cody L.:

Lots of government boot lockers. There is a difference between “have to” supply and “SHOULD have to” supply. 

No. The government shouldn’t be in so much of our damn business. I track every penny in and out and pay appropriate taxes. So it drives me nuts when I have to give my social to some organization that’s paying tenant rent. Or even my social to get a property tax refund or money out of the court registry.  

I am not questioning that you do the right thing, but small business tax fraud is a very serious problem. If there was no system to track accountability, it would be far worse. When one person doesn't pay taxes, it just means the rest of us pay more. 

There is also people who unintentionally commit tax fraud. Just reading the forums, I continually run into people who have no understanding of tax requirements for real estate or rental properties. People tell them to get an accountant and they complain it costs too much. There is books out there that spell it our in detail, but some people just refuse to learn the proper way to run a business.

So between the people intentionally not paying taxes and those doing it out of ignorance, that is why big brother is making all of us report.

Even as a landlord you should be getting social security number of un-incorporated subcontractors and sending them 1099 when you hit certain spend thresholds. This is why the rent payment agencies send to you, because it is the law. Many of these "low cost" contractors reduce costs by not paying taxes (or not being insured, bonded or licensed). Tell someone you are going to 1099 them and magically your price goes up...

Yeah we 1099 people but only because I have to. Not happy to have to do it. I feel like the IRS has me working as their unpaid tax collector.  

@Joe Splitrock , "When one person doesn't pay taxes, it just means the rest of pay more."  Certainly this is the common belief.  However it is only partly true and provides no justification for forcing any person to pay a tax.

As to whether the rest of us pay more when someone doesn't pay, -that is how finances would work for you or me.  The effect of cash shortages on our government is different.  When government has a cash shortage, the government prints, borrows, and otherwise expands its balance sheet.  Most of the dollars borrowed will never be paid, and it is mostly foreigners who will lose.  

In the US, revenue shortfalls are handled primarily by creating more money.  Government monetary creation to replace unpaid taxes does slowly devalue everyone else's dollars. As you noted, this is a cost to "the rest of us", -except that the cost to the rest of us from someone not paying income tax is typically only 14% of the taxpayers income tax evasion.  US citizens bear a small percentage of the cost of taxes evaded because most government expenditures are financed from sources other than income tax (62% of 2018 expenditures [52% of the budget] came from sources other than the income tax) and because the most the devaluation costs of creating additional dollars to cover unpaid income taxes are borne by foreigners (63% of US dollars are held by foreigners, only 37% held by US citizens in 2014).  https://fas.org/sgp/crs/misc/RS22331.pdf 

 Income taxes comprise only 48% of the US revenues. https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government . Income tax revenue comprises only 38% of actual US Government expenditures. (1.68 trillion income tax revenue divided by 4.4 trillion outlays [2018] =38%).  Since, only 38% of government expenses are funded by income taxes and since, US citizens bear only 37% of the loss in value from newly printed dollars used to cover US revenue shortfall, only 14% of revenue shortfall is borne by US income taxpayers. (38% of US expenditures paid from income taxes x 37% of loss in the value of the dollar borne by US taxpayers = 14% of US revenue shortfall from failure to pay income tax is borne by US citizens.)

The great advantage of the dollar being the world's reserve currency, is that it is mostly foreigners, not us, who bear the cost of constantly devaluing the US dollar. https://comparegoldandsilverprices.com/news/economics-101/dollar-devaluation-since-1913/

Moreover, many authors have noted that the US does not need the income tax to fund the government at all.

https://www.forbes.com/sites/briandomitrovic/2013/04/02/to-fund-the-federal-government-we-dont-need-federal-taxation/#573211bd51f3

Indeed, for well over a hundred years the U.S. government ran just fine without an income tax.  Financially speaking, the nation ran better without an income tax than it has since the income tax was imposed in 1913.   

@Cody L.  Even if the cost of not paying is great -no one should be forced to pay income tax - Law is force. "The State is a dead hand that imposes itself on society, mainly benefiting those who control it, and their cronies. ... [The idea that,] We need libraries of regulations, and 'I’m happy to pay my taxes.' 'It’s the price we pay for civilization.' -No, that’s just the opposite of the fact. Those things are signs that civilization is degrading, that the members of society are becoming less individually responsible. And therefore that the country has to be held together by force. ... 

"It’s all about control. Power corrupts, and absolute power corrupts absolutely. The type of people that gravitate to government like to control other people. Contrary to what we’re told to think, that’s why the worst people – not the best – want to get into government."  quoted from Larken Rose "Message to the Voting Cattle" emphasis added.