Assigment of Income

Thanks for your reply, Rudy-

I would prefer to find an alternative to doing the accounting this way if anybody has an idea. The commission that I take is a small percentage, so I will be dealing with a large amount (in the thousands, at first) of clients who are billing their customers through me. I don't want to have to be the one responsible for accounting for income that I didn't earn and for sending out 1099's to all of my client's customers, I want to be in a situation where my clients' customers are responsible for sending their own 1099's. The services which are being paid for are provided by my client to their customer, with no interaction or guarantee on my part except for the fact that I accept funds on behalf of my clients. It seems that the Assignment of Income Doctrine would say that the money that I pass along to my clients can be excluded from my income because it was earned entirely by my client. The commission that I take represent my only true earnings, as the fee for referring customers to my clients' business. Am I interpreting the Assignment of Income Doctrine incorrectly? Thanks, Michael

If they're making their checks out to you, I don't know if you can really get away from it. On possibility might be to have an agreement with your clients whereby all money that comes in is theirs, that it will go into a trust account where you will hold it for them, and then you will deduct your fee from their money before you forward it on to them. But the tax preparers will have to tell you whether what works on a legal basis will work for the IRS. Stu