Taxpayer asks:
I received my 1099 on Feb. 8 and noticed that the amount looked higher than it should have been. So I checked my bank records twice. Compared to the 1099, my bank statements said $646.01 less than the 1099.
Feb. 12, I call my ex-boss’ accountant (T), and tell him about this problem. I tell him that I didn’t want to talk to her at all, and he said that he would.
Feb. 26, I call T. He said, that he believes that amount on the form is correct. But I tell him that I have bank records. He says that he understands and that he would change it but he needs her permission or authorization.
Mar. 11, I call T again, nothing from her.
Mar. 13, I finally have the guts to call her and ask to see her records and compare my records. She says, sure. We meet, she looks at my bank records and says “you didn’t you to bring your bank records.” And guess what? She did not have any records at all to show me. She said twice, she was going to call T that day, I said thank you.
Mar. 14, I call T, and tell him that she told me that she is going to call him. He says nothing from her, and he will leave a message.
Mar. 17, I call T, nothing from her.
Mar. 18, I called her and gave her 2 options from my accountant 1) call T 2) pay the difference of what we (spouse) might owe. She replied “I don’t now how much that is.” I told her “that is your fault”.
Mar. 19, I call T, good news. She called, change it. Bad news, T does not have the forms, he has to order them.
Apr. 1, I call T he tells me that he had to order them from his suppliers, supplier.
Apr. 9, I call T he tells me that he is waiting on the UPS man, then he can do my forms? He said he would call when they are done.
Apr. 15 tax day, nothing. Who’s fault is this? Mine, for waiting so long to confront her personal and semi-verbal to change it? T, not having forms in the first place? Hers, putting the wrong amount, not wanting to change it, and delaying it, and maybe having hold on the accountant? So so sorry for the lengthy descriptive question. Hopefully you can answer this for me. If not thank you for letting me vent.
Thank you.
Taxgirl says:
Clearly, you made an effort to resolve the matter.
The responsibility is with the issuer to ensure that the 1099 is correct.
I would contact the IRS and advise that the 1099 is not correct. Check out this prior post for the phone number and what to have handy when you call.
If there are interest and penalties to you as a result of the payer’s failure to resolve the matter, IRS should be willing to abate – problem solved. If the IRS doesn’t abate but it is the fault of the payer, I would send them an invoice for the amount due as a result with a note that you might take them to small claims court to recover if you are not reimbursed. Of course, the latter depends on the rules in your jurisdiction regarding the amount, ability to sue, etc., so I would strongly recommend that you wait to see what happens with the IRS first and then contact an attorney if you still have an outstanding liability.
Good luck.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
I LIVE IN BELLFLOWER AND I NEED SOME ONE ONE TO HELP ME WITH BACK TAX’ES A.S.A.P..ACN YOU SEND ME SOME ONE OR HAVE SOME ONE E-MAIL ME
Unfortunately, I don’t give out referrals over the web site, sorry about that.
For more info about the site, be sure and read http://www.taxgirl.com/about/ and http://www.taxgirl.com/official-comment-policy/ – as well as the other info in the sidebar.
Thanks.
At this point you should just file your return with the amount you think is correct. If you had more time like back in March I would have advised you to contact the IRS at (800) 829-1040 informing them that you received the 1099 and disagree with the amount. Tell them that you’ve tried to resolve the situation but have been unable.
In addition, you need to tell the IRS that you to complete a Form 4598, “Form W-2 or 1099 Not Received or Incorrect”. The form is for IRS’s use only so you won’t find it on IRS.gov. You’ll need to give the IRS all of the facts the payer information from the 1099 and the details of how you arrived at your figures. The IRS will send the complaint form to the payer, who has 10 days to respond. A copy will also be sent to you. Assuming everything works as it should, you’ll receive a corrected 1099 from the payer. If you don’t receive a satisfactory response by the due date of your return, include the amount that you believe to be correct on your return (line 21) and attach the Form 4598 and an explanation.
Tax Girl! Great site, great service! I hope you can help me.
In January 2008 I received a 1099 form from a company. I should NOT have received one at all; although I did receive payments from them, the payments were all for reimbursement, not income. I notified the company, and filed minus the mistaken 1099. Then I forgot about it for the rest of 2008.
Now, I received a bill from the IRS about that 1099 form, notifying me that I owe $2300 in tax and penalties since I forgot to include it on my return for 2007.
I contacted the CPA for the company, asking him to please correct this information with the IRS. He told me that it was too late – he was unable to change anything now. So I was stuck with it.
Is he correct? It seems that the IRS would always have methods by which a company could correct errors, regardless of when they are discovered.
Help??
You might want to file an amended return for 2007. Include Schedule C. Report in Part I of Schedule C as gross income the amount on the Form 1099. Report in Part II of Schedule C the amount that represents these reimbursed expenses. At the bottom of the schedule the expenses will exactly offset the reported income, thereby giving the proper result of $0 income.
Of course, Schedule C can be a red flag, and the IRS might want to investigate that the expenses were legitimate. In that vein it would have been easier to avoid the Form 1099 situation in the first place. But once there is an outstanding Form 1099, it has to be dealt with and cannot simply be ignored.