Income Misattribution by 1099-Series Form
In the experience of U.S. colleagues who have not incorporated their
businesses, it is common to receive 1099-MISC copies bearing on
their work, and not that uncommon to see overstated amounts
recorded in those forms. (I know of a colleague for whom a certain
such form should never have been issued at all.) Here are some
thoughts on getting the problem resolved.
First, you are always entitled to receive a form that will be correct
as to money and otherwise. You should never let the matter rest
until you do receive one.
Fortunately for you, the payer is unquestionably required to set
the matter right. If necessary, you can point out
https://www.irs.gov/pub/irs-pdf/i1099gi.pdf
for the client, in particular citing section H on page 10, as well as
the information about error types on the subsequent page. (Actually,
the rather vague mandate at about the start of that section,
"Furnish statements to recipients showing the correction,” is fully
fleshed out on the next page.)
One suggestion that I have seen made is to include with your return
a copy of your 1099-MISC copy, of course with a clarifying note
written on it; as a last-ditch and last-minute effort, that may perhaps
be okay. But getting out in front of the problem by getting the company
to issue a legally mandated correction is immeasurably better. Issuing
such corrections will be routine for any reputable company, and can
certainly be made to happen even if the company is not all that
reputable.
The recipient of one of these flawed forms ought possibly to mention
the problem to their tax adviser, specifically for help if needed in
obtaining a corrected tax form. After all, until this happens, some
amount of income remains misattributed to the “victim.”
Tags: