What is Paymaster, and what services do they provide?
Paymaster acts as a neutral third party to receive funds from any transaction between two separate individuals or businesses. The Paymaster maintains an escrow account and disburses those funds to the seller per the instructions spelled out in a Sales and Purchase Agreement (SPA) or Services Agreement. After taking a contracted commission as payment for his services, the paymaster reconciles the escrow account and fills out the necessary IRS paperwork. Placing the funds in escrow with a neutral and trustworthy third party reduces the risk to both buyers and sellers in these transactions. It assures the seller that sufficient funds are available for payment, and it allows the buyer to receive title to the goods in question.
The paperwork must include the following for all parties seeking to employ Consumer Rights Law Firm, PLLC, as their paymaster and escrow provider:
- A copy of a valid driver’s license and/or passport
- Complete IRS form W-9 for U.S. citizens involved
- For non-U.S. citizens: Completed IRS form W-8BEN
- Copy of all transactional documents, including payment agreement.
Paymasters are commonly used for transactions involving goods, products, or commodities, which typically involve large sums of money. Therefore, our services are used to facilitate the payments and disbursement of funds. Placing the funds with a neutral and trustworthy third party reduces the risk to both buyers and sellers in these transactions. It assures the seller that sufficient funds are available for payment and allows the buyer to receive title to the goods in question.
The paymaster is not a party to the transaction and does not know the exact time that it will close. Part of his job is to check periodically with the escrow account to ensure the payment has been transferred and to disburse the funds per the direction of the sales and purchase agreement or service agreement. Paymaster is not allowed to disclose the identities of the parties to the transaction.
A Paymaster is often an attorney because attorneys have the ability to use an Attorney Trust Account, also known as an “IOLTA Trust Account.” An IOLTA Trust Account provides an extra level of security because it is carefully monitored by the state bar in which the attorney is licensed. As a licensed attorney, Paymaster is subject to heavy penalties and stands to be disbarred if any funds are misappropriated.