Corrected 1099-MISC

[Janitor Bob]

In February 2007 (for tax year 2006) My client originally received a 1099-Misc with $1652 in box 3 and $13,330 in box 7. My client knew (from her pay records) that this was not correct.....She went several rounds with the issuer (a small local business) and received several "Corrected" 1099 Misc over the course of last year....finally in September 2007 receiving the correct "corrected" 1099-Misc that indicated nothing in box 3 and $9,331 in box 7....This matched her pay records.

So she filed her return with this final corrected 1099-misc.

Now, she receives a Notice from IRS (CP2000) that they have corrected her return with the amounts on the original 1099-Misc....IRS stated that they had not received ANY of the corrected 1099-Misc.

These 1099-Misc (copy were done by hand by the issuer...is it possible they never sent copy A to IRS?

I have drafted a letter and will send it to IRS with a cpy of the corrected 1099-misc....I assume IRS will contact the issuer to find out why they never received it?

[Ray in Ohio]

Sounds like the issuer thought they were rid of that pesky client of yours who insisted on a correct 1099 by handing her a "corrected" one. But never bothered to correct it with the IRS. Just goes to show that what goes around, comes around. (and bites where it hurts).

Lemme think, shouldn't you be invoicing the issuer for your time etc. to correct their mistake?

[Janitor Bob]

Sounds like the issuer thought they were rid of that pesky client of yours who insisted on a correct 1099 by handing her a "corrected" one. But never bothered to correct it with the IRS. Just goes to show that what goes around, comes around. (and bites where it hurts).

Lemme think, shouldn't you be invoicing the issuer for your time etc. to correct their mistake?

The worst part is that we are currently holding off on filing her tax year 2007 returns because the exact same scenerio is playing out this year....1099-Misc received last week is incorrect and issuer has said "I'm sorry, I messed up again this year"....Now client can say yes...and I know where you messed up somewhere else.....by not filing the corrected 1099-Misc to IRS....make sure you do it right this time!

....Man.....this small business really should be using professionals for their finances and taxes.....and it is NOT gonna be me!

[MJG CPA]

The erroneous 1099's may be intentional. Issuer may be using higher amounts to inflate his/her deductible expenses. If no one complains, they will probably get away with it [unless they get audited and can't prove the payments].

I had a client once whose "friend" filed a 1099 in his name (without giving him a copy) because he needed more tax deductions that year. IRS sent my client a bill for additional tax due. Nice friend ...