Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What action should be taken if a W-9 form is not provided by the cooperating broker?

1. File Form 1098

2. Write a waiver

3. File Form 1099-MISC

4. Issue a verbal warning

The correct answer is: File Form 1099-MISC

When a W-9 form is not provided by the cooperating broker, filing Form 1099-MISC is the appropriate action. The W-9 form is crucial for gathering the Taxpayer Identification Number (TIN) and other essential information from the broker in order to report payments correctly to the IRS. If the cooperating broker fails to provide this form, the entity making the payment has a responsibility to report the payment irrespective of the missing information. The 1099-MISC form serves as a report for the IRS indicating the amount paid to non-employees or contractors in a tax year. If the W-9 is not submitted and the payment is made, filing the 1099-MISC becomes necessary to ensure compliance with tax reporting obligations, even if the details on the form may be less than complete. This protects the paying party from potential penalties related to unreported income. Other options do not fulfill the necessary obligation mandated by IRS regulations. For instance, filing Form 1098 pertains to reporting mortgage interest, which is unrelated to this situation. Writing a waiver does not address the tax reporting issue either and issuing a verbal warning does not fulfill the legal requirements regarding tax documentation. Hence, the correct step is to ensure that Form 1099-MISC