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LL request for W9

NYC Rent Regulation: Rent Control/Rent Stabilized, DHCR Practice/Procedures

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LL request for W9

Postby sr77 » Tue Nov 13, 2018 7:30 pm

Is it standard for landlords to ask tenants to complete and return W9's re their security deposits, presumably to comply with tax reporting requirements (even on virtually nil interest income earned on the security deposit)?
"Please be advised that our accounting department has requested an updated W9 form from each lease holder in order to update your security deposit account. Kindly, print, complete, sign, and return the attached W9 form to our office as soon as possible."

Thanks.
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Re: LL request for W9

Postby TenantNet » Tue Nov 13, 2018 8:04 pm

Our understanding is that a W-9 form is not required by any housing laws. The bank holding your deposit might want it for reporting purposes, but it's not required. We recommend you complete nothing except that which is legally required. LLs are not entitled to your social security number. These days interest on deposits is so low (often less than one dollar) it makes no sense to give them any such information.
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Re: LL request for W9

Postby sr77 » Fri Nov 16, 2018 12:03 am

TenantNet wrote:The bank holding your deposit might want it for reporting purposes…

Thanks. Any reason not to provide the information directly to the bank?
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Re: LL request for W9

Postby TenantNet » Fri Nov 16, 2018 2:26 am

You're assuming the LL will give you the bank's correct information, location and account no.

Banks might be safe with SS# - but I would google that to see just how safe they are before doing so. Plus, who's to say the bank won't give it to the LL?

The reason banks would want the SS# is for backup withholding. Go to irs.gov to see how that works, but if your interest is next to nothing, then any backup withholding is less than that. How much would you get back as part of a IRS refund?

Back in the days of 5% interest, one could get a hefty little pile of interest over time, but these days interest in under 1% last I checked. Take the 1% that LL's can take off the top, then the backup withholding, then any interest you receive is zero or something very little. Why risk your SS# for such a paltry sum?
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Re: LL request for W9

Postby sr77 » Sat Nov 17, 2018 6:41 pm

Thanks. I have the bank information from a previous contact a year or so ago, which may have been related to the same issue.

Since the security deposit account already exists, wouldn't the bank already have to have my SS#?

Maybe not. I seem to recall that tenant security deposits are often held in aggregated accounts, rather than individual ones. In that case, I suppose the bank could have the security deposit but not necessarily a SS#.

Even so, wouldn't the bank need my SS# for me to get the security deposit back if/when I move?
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Re: LL request for W9

Postby TenantNet » Sat Nov 17, 2018 7:19 pm

Take a look at http://tenant.net/phpBB3/viewtopic.php?f=15&t=13575

I don't believe commingled deposit accounts are legal. See http://tenant.net/Rights/CTRC/ctrcf006.html (old but still valid)
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Re: LL request for W9

Postby sr77 » Wed Dec 05, 2018 5:36 pm

Thanks. From what I can see only the commingling of security deposits with the landlord's own funds is expressly prohibited.

So far I haven't come across anything prohibiting aggregating tenant security deposits in one or more accounts (e.g., one account for all the tenants in the same building).

That said, thinking about it, I'm not sure how that would work, since a 'joint' account would presumably require express permission of the tenants, none of whom are likely to want their security deposits commingled.

Maybe there are special exceptions for financial relationships of this kind (i.e., landlord/tenant) that allow commingling?
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Re: LL request for W9

Postby BubbaJoe123 » Thu Dec 06, 2018 1:48 pm

Based on the CTRC link that TenantNet provided above, the rules appear to require a separate account for each tenant:

"The term "in trust" means that the moneys collected for a rent security deposit remain the property of the tenant and must be placed in an individual tenant account."

That said, lawyers often hold funds in trust for clients, and they have a single trust account typically, rather than having a separate account for every client.
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Re: LL request for W9

Postby TenantNet » Thu Dec 06, 2018 8:48 pm

There must be a separate account for each tenant's deposit. It's really just an accounting issue. There is no real cash in a box with your name on it.
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