Public Mediation

Wells Fargo Bank's Wells Fargo Advisors-Dispute-#1078654

L. C. vs. Wells Fargo (Headquarters)
420 Montgomery St, San Francisco, California, 94104-1207, United States
Amount Involved: $18,300.00
    • Status: In Negotiation
      This claim has posted for public comment and negotiation. It will remain posted until resolved to the claimant's satisfaction. Suggest a resolution to help these parties reach a settlement.
       (seeking public comment)
    • Claimant Seeks: View.
    • Claim #: 1078654
    • Amount Involved: 18,300.00
    • Filed On: Sep 29, 2012
    • Posted On: Oct 10, 2012
    • Complaint(s):
      • Bad business practices
      • Problem with a service
      • Customer service runarounds
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Statement of Claim
Complaints Involved (4) - View
Claimant says:
"Wells Fargo Bank's brokerage affiliate, Wells Fargo Advisors (WFA) illegally took $18,300 from the account of a charitable, tax-exempt organization and will not restore it. When we opened the account ending in 9727 we gave WFA a copy of the charity's founding documents and stressed that it was a charitable tax-exempt organization. WFA ignored the documents and our oral certification and classified its “account type” as TAXABLE.
IRS requires that brokers solicit organizations' tax identification number (TIN) when
new accounts are opened. IRS provides Form W-9 to report the TIN so taxpayers can certify that the TIN is correct. We gave WFA the correct TIN and signed several documents when the account was opened. We assumed all was completed and fine. Instead of using the easy IRS W-9 when the account was opened, WFA used the TIN we gave them to print it on a substitute W-9 along with a new set of forms in a Welcome Aboard Guide of 88 pages, and sent them to us 10 days after the account was opened to sign again and return the second set of forms.
WFA buried the second set of forms to be signed behind 88 pages of legal terms and conditions in print so tiny that it requires a magnifying glass to read it. WFA calls this book a Welcome Aboard Guide to “thank, serve and help us” while warning that we read all 88 pages of the enclosed Agreement documents carefully and promptly sign the forms at the end. When anyone asks you to “promptly sign and return” any documents that will bind you to 88 pages of tiny-print legal traps not required by IRS, we should slow down, get out the magnifying glass and read very carefully for the weeks of any spare time that it takes. The Welcome Aboard Guide did not include one word about a deadline date to return forms, and not one word about any punitive action like restricting account trading or backup withholding on every sale.
Meanwhile, without any prior notice or warning, WFA began backup withholding 28% of the gross proceeds of every investment sold, even when the sales resulted in a loss with no tax due even for taxable org's, and never due for tax-exempt org's. Tax-exempt org's are exempt from backup withholding as clearly stated in IRS instructions for the W-9 and in several other IRS instructions to brokers.
WFA tries to justify their illegal taking of charitable funds because the TIN was MISSING until we returned a second set of account opening forms, when we gave them a copy of the IRS letter issuing the TIN to this charitable org. and they used it to reprint it on the second set of forms. Not only did WFA have the TIN from day one, IRS Instructions for the Requester of Form W-9 clearly instruct: “Even if the payee does not provide a TIN in the manner required, you are not required to backup withhold on any payments you make if the payee is: 1. An organization exempt from tax....”
WFA ignores many IRS rules to be more aggressively punitive to customer's by taking and sending funds to IRS that IRS does not require of charitable org's. WFA refused to provide copies of the electronic documents they created and we signed when the account was opened on 10/10/2011; and refuses to provide copies of the documents we gave them to prove that they had the TIN and proof of charitable tax-exempt status the same day the account was opened.
Beware doing business with Wells Fargo Bank's affiliate Wells Fargo Advisors or any firm that uses IRS rules to abuse its customers even more than IRS would. WFA should stop allowing First Clearing LLC to cover their errors by responding without WFA IRS specialists review. When will WFA correct their errors and restore $18,300?
Larry Campbell, Trustee and WFBank preferred customer for 51 years."
...
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Additional Communication Between Claimant and Wells Fargo (Headquarters) Hide
  • Oct 20, 2012, Claiming party added:

  • Well Fargo Advisors claims to be enforcing IRS rules, but will not identify the specific rule because they cannot. It does not exist. No IRS rule requires brokers to begin backup withholding on charitable organizations at any time. No IRS rule requires brokers to begin backup withholding on any person or organization without prior notice and within 21 days of opening a new account. No IRS rule requires brokers to ignore a correct Taxpayer ID number that is provided by customer until after brokers accept and print that TIN on a new form. No IRS rule requires brokers to bury a substitute W-9 under 88 pages of tiny print legal terms and conditions and require those 88 pages to be read and agreed to before signing and returning a substitute W-9. No IRS rule requires brokers to begin backup withholding 18 days before the deadline date the broker set for returning the buried and signed substitute W-9. No IRS rule requires brokers to be more punitive than IRS would be. Avoid WFA!!!

  • Jan 12, 2013, Claiming party added:

  • Wells Fargo Bank and their affiliate, Wells Fargo Advisors will not answer me and will not answer People Claim, and will not answer Better Business Bureau because they are wrong in ripping off charitable organizations who open new accounts with them. After a full year, WFA still classifies our charitable organization as "TAXABLE" even after admitting that it was tax-exempt. They do not understand the IRS rules they claim to administer. They will not acknowledge that charitable organizations are exempt from tax withholding. They will not admit that they had all the information needed for the IRS Form W-9 on the first day we opened the account. They will not give us copies of the information we provided to them on day one to prove they had a correct tax ID number from day one. They are so incompetent they cannot even cite the IRS rules to justify what they did to us. Their failure to provide a response to People Claim, and BBB clearly shows their lack of respect for customers and their agents to obtain a resolution and a refund of 18,300 taken illegally.
    Any attorneys want to file a claim on behalf of many customers like me?

What Claimant Wants Hide
1. Recovery of Losses: Illegal backup withholding Oct 14, 2012 $18,300.00
2. Other – Copy claim to regulators Oct 14, 2012 $14.95
3. Other – Pay for claim posting cost Oct 14, 2012 $7.95
Cash total : $18,322.90
  • 0
Do you agree with the claimant’s demands?  (If you are a party to this claim, click here.)

Respondent's Counteroffer

There has been no response to this claim from Wells Fargo (Headquarters). This claim will remain posted until resolved
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  • Comment: by ilo2 — Online mediator
    • On: 10-16-2012
    View more
  • Sounds like your beef is with the IRS not the brokerage firm. They sent your money to the IRS as they are required to do if you don't fill out paperwork in a timely manner. Speak with you CPA and he will tell you what to do. Next time don't ignore your paperwork requirements.
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