I recently signed a Mutual Termination of Lease agreement with a landlord who purchased the complex I was living in (CA,USA). Part of the termination of lease agreement specified a large payment for relocation assistance. The agreement has been executed.
When I went to pick up the payment, the landlord wanted me to sign a form containing my legal entity name, SSN/Federal ID, signature, name, date, etc. The form states "In order to comply with federal reporting regulations, please provide your SSN or TAX ID which will be used to determine the necessity for filing Form 1099 for payments made to you."
Is this legal? As an individual who is not familiar with income tax law, I don't understand why a company would report the payment using Form 1099 (I'm not their employee, only their tenant).
Also I would like to understand how such a payment for relocation assistance could be classified - will I have to pay income tax?
Appreciate your thoughts or guidance.