And Thanks @Bill Gulley and @Jay Hinrichs Bills comment about REGs auditing made me think about my process.

Bottom line if they are paid anything over $600 you better 1099 them otherwise you will suffer in an audit.

There is also a lot of liability and risk of audit if someone files a complaint against you. 

Kristine Marie PoeI'd say you're right, except that closed transactions show up in audits after closing, it's not the closing agent responsible for such matters but the selling broker.......in their absence, the seller.

I personally love representing TT clients in audits.

@Katherine Robbins - You set your company up correctly for your activities, but you need to be taking paychecks.One of the key things the IRS looks for to open an audit is the lack of reasonable compensation of officers in an S Corp. 

It further states that you accept responsibility for maintaining records of all list usage and that you are legally obligating yourself to audits by ProLogic (at their discretion) to ensure proper usage.

I have been DRE Audited 3 times, all passing with flying colors so to speak. 

You do have to be mindful of CA code and make sure your docs include the specific language for equity purchases for sellers in foreclosure (if that's the case).Any attorney who says purchasing property subject-to existing liens or mortgages is illegal has failed the audition for your team.

I’ve seen over 10 loans called during “quality audit”.