New client gave me his 2018 Tax Documents for the preparation of his 1040. Included in the documents was a 1099-Misc for almost $100,000. During our discussion, he explained that he has received this 1099-Misc form the same hospital for the past three years. My client is a plastic surgeon and in 2014, he was hired by a plastic surgeons office (Employer). Per my client, the employer contracted with a not-for-profit health care system operating multiple hospitals (Hospital). The Hospital would use my client services and pay his employer. Per my client, he never received a check from the Hospital only his employer.
In 2015, the 1099-Misc from the Hospital was properly reported to the Employer. However, after this year, the Hospital informed the Employer that due to federal stark law - the 1099-misc needed to go to my Client. 2016 and 2017 the 1099-Misc was then reported to my client. My client asked that it was changed but was told they couldn't due to Stark Laws. In 2018 he left the Employer and opened his own office. However he has received another 2018-Misc for the time he was with the Employer.
My client has not reported the 1099-misc on his 2016 nor his 2017 tax return. In 2016 he received an letter from the IRS for not reporting a very small amount of investment income but nothing was mentioned about the 1099 which I found odd. He does have a schedule C in 2014 - 2017 for 1099s he received for "medical payments" so I thought maybe that was the deterrent for the recognition of unreported 1099-misc. However approximately $75,000 was reported on the Schedule C, gross receipts. If the 1099-Misc from the Hospital was also reported, the gross receipts would have been $175,000.
About four years ago, I had another client receive a 1099-Misc from a client he worked for through The Company he was a contractor with. My client didn't get any payment, The Company did. He didn't report and he received an IRS notice. I called the IRS expecting it to be a battle but the agent I spoke with said, "ok, I will remove the income". I hung up the phone in complete shock that it was that easy.
I thought about calling the IRS again but this situation is a little more complicated because not reporting in 2016 and 2017.
Does anyone have any advice for me on how to best handle this for reporting?
In 2015, the 1099-Misc from the Hospital was properly reported to the Employer. However, after this year, the Hospital informed the Employer that due to federal stark law - the 1099-misc needed to go to my Client. 2016 and 2017 the 1099-Misc was then reported to my client. My client asked that it was changed but was told they couldn't due to Stark Laws. In 2018 he left the Employer and opened his own office. However he has received another 2018-Misc for the time he was with the Employer.
My client has not reported the 1099-misc on his 2016 nor his 2017 tax return. In 2016 he received an letter from the IRS for not reporting a very small amount of investment income but nothing was mentioned about the 1099 which I found odd. He does have a schedule C in 2014 - 2017 for 1099s he received for "medical payments" so I thought maybe that was the deterrent for the recognition of unreported 1099-misc. However approximately $75,000 was reported on the Schedule C, gross receipts. If the 1099-Misc from the Hospital was also reported, the gross receipts would have been $175,000.
About four years ago, I had another client receive a 1099-Misc from a client he worked for through The Company he was a contractor with. My client didn't get any payment, The Company did. He didn't report and he received an IRS notice. I called the IRS expecting it to be a battle but the agent I spoke with said, "ok, I will remove the income". I hung up the phone in complete shock that it was that easy.
I thought about calling the IRS again but this situation is a little more complicated because not reporting in 2016 and 2017.
Does anyone have any advice for me on how to best handle this for reporting?
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