Bulletin: CA000028

Date:
December 04, 1997
To:
All California Issuing Offices and Agents
RE:
TIN Fraud

Dear Associates:

In the course of reviewing a trust which had been submitted, we have discovered that at least in this instance, the TIN given by the trustee to the escrow officer was not a Taxpayer Identification Number assigned by the Internal Revenue Service, but a Trust Identification Number plucked from thin air by the "trustee".

Consider the position of the escrow which has relied on this fantasy in reporting the sale by the trustee, to the IRS on a Form 1099. If the number is one which is already assigned by the IRS to another entity, there will likely be some involvement of the escrow in coming to an explanation of how this occurred. There will be a similar series of explanations due in the circumstance in which the information comes to the IRS and they are unable to tie the information to any previously established account. All of this will take time and effort, which is the stock in trade of the escrow. And that assumes that the IRS does not claim that the escrow has entered into a conspiracy to furnish false information.

Note also that the matter would not have come to light if the agent had simply relied on a trust certification. In this instance the full trust and supporting documentation were required by the title officer because there were reasons, which turned out to be well founded, that the trust was a "Pure Business Contract" trust. The information was derived from some of the additional materials which the seller apparently put into the package to bulk it up. It is worrisome that the document was a pre-printed form, apparently sold as part of a package.

Moral of the story: It would help to have a copy of the form on which the IRS established the Taxpayer Identification Number for any entity, but particularly for an entity which looks a bit strange to being with. Remember that you can require proof of such matters whenever you are uneasy about their authenticity.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None