I have a diagnostic relating to a seller-financed mortgage not having a SSN to report on Schedule B. The buyer is actually a business with an EIN. What are my options?

[mattgutz]

The business owner has provided the EIN but does not want to supply a SSN.  I need help!!
Thank you!

[BobKamman]

Try reading the Schedule A Instructions.  Diagnostics are generally written by programmers who take their returns to H&R Block.  

Seller financed mortgage. If you paid home mortgage interest to the person from whom you bought the home and that person didn’t provide you a Form 1098, write that person's name, identifying number, and address on the dotted lines next to line 8b. If the recipient of your home mortgage payment(s) is an individual, the identifying number is his or her social security number (SSN). Otherwise, it is the employer identification number (EIN). You must also let the recipient know your SSN.

[mattgutz]

I don't think you read the question correctly.  That's OK.  I am not looking at the deduction on Schedule A.  I am looking at the interest income on Schedule B because my client is the seller.

Here is the full diagnostic -

Interest Income Item #2: Enter a valid social security number for all seller-financed mortgage interest income sources. The IRS does not allow EINs for seller-financed mortgage interest. The SSN must be in the valid range for SSNs. It must contain nine digits and cannot be all zeros or nines.

[BobKamman]

The SSN is required only if the buyer is using the home as a personal residence.  At least that's what the IRS insructions say, but they have no way of enforcing that because you don't need an SSN to buy a home in the United States.  It's just one of those things on the IRS wish list, that they try to make look mandatory when it isn't, and they don't have the funds to match Schedule A deductions and Schedule B income anyway.  

[BobKamman]

Section 6049(b)(2), relating to information returns, tells us

(2)Exceptions
For purposes of subsection (a), the term “interest” does not include—
(A)interest on any obligation issued by a natural person,

Are there any practitioners here who are preparing 1099-INT forms for clients making payments on seller-financed mortgages?

IRS has been aware of the problem since 1991, when GAO issued a report ponting out that “Federal law does not give IRS the authority to require buyers to provide sellers’ SSNs, nor does IRS require buyers to send sellers a notice that IRS is aware of the interest payment made to them.”

https://www.gao.gov/assets/ggd-91-38.pdf

Maybe there has been legislation to change that. We all know how friendly Congress is to IRS requests for additional enforcement powers. You can try to find it. Or you can call their bluff.

[sjrcpa]

Just enter the interest income and the payer's name as you would if the payer was a bank.

[mattgutz]

Thanks to everyone for your insight!