Styling Accounts When The Customer Uses A 'Pen Name'

by Mary Beth Guard, BOL Guru

Question: We have a customer that is an author and has several "Pen" names, but only one social security number, naturally. How do we >
Answer: Ideally, the publishing companies should be issuing his checks in his real name. After all, after the end of the year they will have to report to the IRS what they paid him and they're going to have a problem if the name and social security number do not match.

On the other hand, that's their problem -- not yours. Your problem consists of "knowing" your customer and making sure he isn't somehow defrauding you. Imagine for a moment that I come into your bank and tell you that I write books under the pen name John Grisham and that the guy pictured on the back of the books is just a model I hired to ensure my privacy. How do you know whether or not I am telling the truth? Obviously, that particular example is far-fetched, but you basically have a customer who is telling you they are masquerading as someone else and getting paid for it. You have to come up with some way to confirm what he's telling you, or figure out a way to minimize any risk of loss attendant to allowing him to deposit checks that are made payable in a different name.

What kind of documentation can you get from him that would show that he is the same person as these aliases? Can he (is he willing to) provide you copies of publishing contracts which list the aliases and his address? At the very least, I would be inclined to request that he execute an affidavit (a sworn statement, signed under oath before a notary), setting forth his story about publishing under Pen names and listing the pen names.

First, however, strongly suggest to the customer that the publishing houses issue the checks to his legal name. To bolster your authority for doing so, you can point him to a Q&A found at WritersWeekly.com. In response to a question about getting paid in a Pen name, the WritersWeekly expert stated:

"While using a pen name for publication in articles and books is fine, you'll have to give your legal name (as well as your social security number) to the editors you're sending your work to. You'll have to sign their contracts using your real name and your real name is what you'll have to put on your invoices to them. This should keep you legal and keep payments from going to the wrong name. Many publications send writers in the U.S. 1099's for tax purposes. If you don't give your legal name to a firm and they issue tax information to the IRS under your pen name, you'll both get into trouble."

The original version appeared in the May 2002 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com 10/14/02