Ask the Taxgirl: Erronenous 1099

by Kelly on February 26th, 2007

Taxpayer asks: A tax client was issued a 1099-MISC for rental income received in 2006. Box 1 of the form showed $1000 when the correct number should have been $500. My client contacted the issuer, but the issuer will not correct this error. Please advise as to what I should do.

Taxgirl says: Gosh, this is a tough one. I think your first step should be a strongly worded letter to the issuer reminding them of their obligation to issue a correct 1099. In fact, there are penalties to the issuer for not supplying the correct information, and those penalties will increase as time passes. I would also indicate in the letter (since you said this was for a client) that you will hold the issuer responsible for any damages to your client as a result of the issuer’s failure to report the correct information.

If, after all of that, the issuer refuses to correct the error, you could file the tax return with the correct information - the danger in this is that the discrepancy could lead to an audit.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.