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.”