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I am anticipating receiving a very large sum of money in a domestic wire transfer between banks into my personal bank account from a domestic company's business account. What should I expect once the money has been transferred into my personal account? Like what laws do I need to follow? The money will be transferred out again. I am just a intermediary since I have the same bank as the company that is transferring it. Do I need to send a 1099 to the person I am then transferring the money out to - for tax reasons? What are the tax ramifications, etc...

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    One thing you can probably expect is some scrutiny from the government. This sounds suspiciously like money muling. – cHao May 25 '18 at 23:17
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    You have, unfortunately, just described only one thing: you are being setup for a scam. All "money intermediary" arrangements are scams, because there are actual legal business providers called "escrow services" that are licensed and bonded to perform temporary money holding/transferring needs - or, well, actual banks. Please do not continue cooperating any further in this scam, and report the attempted scam to your bank and the local police. The only alternative is you are being asked to be an accessory to a crime, which isn't better, but you will be fine if you stop before it goes too far. – BrianH May 25 '18 at 23:27
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    @user72678 No legitimate company does that. If you're determined to put yourself on the hook for "a very large sum of money", we can't stop you... But one of two things is almost certain to happen: either you become part of the scam and law enforcement follows the money right to you, or the transfer will get undone somehow and leave you owing the bank a huge amount of money. – cHao May 25 '18 at 23:51
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    @user72678 your friend is not a friend. There is a 99% possibility that this is a scam. You will lose money in the best case scenario. In the worst case scenario you could be complicit to fraud, money laundering and/or financing criminal activities. – ApplePie May 26 '18 at 2:02
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    Words have meaning. There are now online friends that you don’t meet. On line friends you’ve met. Real life you see on occasion. The good friend who will help you move, and the best friend, who would help you move a body. My point? Where does this friend fall? – JTP - Apologise to Monica May 26 '18 at 20:36
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To answer your questions:

I am anticipating receiving a very large sum of money in a domestic wire transfer between banks into my personal bank account from a domestic company's business account.

This just sets the scene. This is nothing wrong with having a company transfer money to your account. It happens every day.

What should I expect once the money has been transferred into my personal account?

Nothing is triggered by this. The money transfer is coming from domestic bank. It looks legitimate. Your bank has nothing to be suspicious about. They will follow their polices on funds availability. So it could be a business day or two before you can spend the money.

Like what laws do I need to follow?

The bank will not notify the IRS or any other government agency. It is a electronic transfer of funds from a domestic bank, it isn't a suitcase full of cash. They will assume that if the business transferring the funds needs to notify the IRS by 1099, or other tax form that will be done. If you leave the funds in the bank, and it earns interest, your bank will send you that form at the end of the year.

The money will be transferred out again. I am just a intermediary since I have the same bank as the company that is transferring it. Do I need to send a 1099 to the person I am then transferring the money out to - for tax reasons?

Now everything goes sideways and becomes suspicious. This is not a legitimate way to operate a business. You could steal the money from them. The person expecting the money could claim you stole it.

But the real risk is to you. If you transfer the money to this other person, and the first group pulls the transfer back a few days later saying a mistake was made. Your bank account will be wiped out. Now the police will get involved.

They could ask you to pull the money out in cash, and keep some for yourself. The large cash transaction will trigger your bank notifying the government. The knock on your door could come weeks or months later.

If the "business" stole the money the police could follow the trail to you.

What are the tax ramifications, etc...

If the transfer didn't look suspicious to your bank. And the police don't investigate the string of transfers as part of a crime...

If they had a legitimate reasons for sending you the money there would either be:

  • No tax implications: for example they were refunding the money from a large purchase you made.
  • Yes there are tax implications: for example they bought merchandise from you; you are contractor for them; you are an employee; you won a prize in contest.

If there are tax implications the legitimate company would either already have your SSN so they could send you a 1099, or a W2. Or they would ask you to fill out a W9.

The 1099/W2 would be sent to you and the IRS early next year.

from the comments:

So my friends asked if I can accept the wire transfer because he doesn't have a Bank of America account.

This confirms the alarm bells. Especially if you have never met the friend.

  • Small correction: for transfers over a certain amount ($10k, I think), the bank is required to notify some government agency (the IRS?). – cHao May 29 '18 at 18:49
  • Only if the transfer is suspect or if a large amount of cash is involved. Checks and electronic transfers are not generally a concern.. – mhoran_psprep May 29 '18 at 19:06
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I am just a intermediary since I have the same bank as the company that is transferring it.

That's just utter nonsense. Every US bank can transfer easily to any other US bank (sometimes for a fee, though). There is absolutely no need for an intermediary, so you are most likely being lied to and taken advantage off.

Likely, it's either a scam or a money laundering scheme, both of which can land you in serious trouble. Contact your bank ASAP and discuss how to best handle this. Ideally they cancel the transfer or just turn it around as soon as it arrives. They may also advise you whether the police should get involved.

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