1099 Misc - too much

[cathyan]

Client is a long-haul driver, has his own truck and trailer and mainly drives for one guy.

I have all his breakdown sheets for the time he has driven for this guy. They are emailed to him, and in order, weekly, so I'm not missing any.

Problem is, the 1099 he was sent is more than $10,000 what he was paid. Client says other drivers are complaining of the same thing, and the company will not change the 1099.

What would be the best way for me to offset the difference? Somehow, I just don't think saying the 1099 is wrong is going to fly.

I've been working with this client for a number of years, and he's not trying to cheat. He's actually almost too honest. If there is a question about a deduction, he won't take it. He's kind of upset about this.

Any ideas?

[jainen]

>> the 1099 he was sent is more than $10,000 what he was paid<<

File an accurate return based on taxpayer's contemporaneous records. Attach Form 8275 or other disclosure for the inconsistent treatment of the 1099.

[MAMalody]

While I do not disagree with jainen's treatment above, there is something I have used before that normally has worked. I simply send the individual in question, (with the taxpayers written approval) a letter indicating that I have their form 1099 and there seems to be a discrepency with your clients records and it reflects too much income. Before we notified the IRS of this information we just wanted to check with them to see if xxxx's information was correct and should we received a corrected form 1099? If they could let us know within the next 10 days we would appreciate it since we intend to file that tax return on that date. This seems to cover the bases. You have clients written permission communicate with the individual/company in question, you are not telling any untruths because you will be filing that information correctly as you see it, you are simply requesting a corrected from and you have a paper trail. I have had 100% positive response in this regard and normally, I think, they were really errors not an attempt to "cook the books."

[Tax Prep by Deb]

Have your client check his last payment received and the first one received this year. Sometimes they will write the check in December, but not mail it until the 31st or even in January. Your clients records maybe reflecting the payment they said they made in December in his January information.

I had a construction contractor for which this happened to several times. When IRS questioned the discrepency between the 1099 and what we reported I simply attached a sample of the last checks received and they agreed with our original return.

This may not be the case with your client, however it is just one possibility.

Deb!

[jainen]

>>When IRS questioned the discrepency between the 1099 and what we reported <<

Deb has a good explanation for what might have caused the discrepancy, and I suggested nothing else. But whatever the client's books show as the reason, you can protect him from being audited, comply with Section 10.34 of Circular 230, and (if the IRS does not happen to agree) avoid an accuracy penalty by simply using the normal disclosure procedure the IRS calls for. Presumably those are all important reasons why your client is paying such high fees.

[cathyan]

Thanks, all. I will try writing to the company first. If that doesn't work, it's the 8275!