1099-Misc Problem

[geekgirldany]

Customer was issued a 1099-Misc under his SS# for 2006 but it was reported under the S-Corp. He always gives me a profit and loss statement so I never saw the 1099. He has now got a letter from the IRS about the 1099 since it was under this SS#.

He wants me to write the IRS a letter saying it was included in the S-Corp. I don't really think that will fly and/or correct the situation. What I usually do is have them send it back to the person that issued the 1099 and send a corrected version in to the IRS. But this is when I usually catch it in the year issued.

I am correct in assuming that this will have to be done in this case also? Contact the issuer and have them send a corrected on to the IRS?

[gkaiseril]

At this point in time a letter with the list of recipts for the business showing the 1099-Misc maybe the only recourse. If you have additonal 1099-Misc and the cover form, issue a 10999-Misc from the taxpayer to the Sub S Corp and include a statement of receipts to show that the S-corp did include the 1099-Misc in its income.

[veritas]

Get a corrected 1099

and send it with the letter.

[geekgirldany]

I'll call the customer and see if he can get them to correct it. If not then I may need to follow the other posters suggestion. Or maybe just show where it was deposited into his corporate account.

[ChEAr$]

No problem

I'll call the customer and see if he can get them to correct it. If not then I may need to follow the other posters suggestion. Or maybe just show where it was deposited into his corporate account.

If you can verify that the amounts were indeed deposited into corporate account and included in
it's sales, simply write the letter and tell IRS that. Get client to sign the letter, however.

They will be satisfied with that explanation and not expect any corrected 1099's from issuer.
Justice will be served and all will be happy.

[JohnH]

Write the letter

I agree - write the letter.
What do you have to lose?

IRS will only do one of 3 things:
1) Write back telling you they need more info:
2) Write back telling you the 1099 needs to be changed:
3) Write back thanking you for the info and telling you the matter is closed.

Prepare the client in advance that this may or may not resolve the question and then go for it. Attach a copy o fpage 1 of the 1120S and some sort of revenue spreadsheet with the amounts totals the 1099 figure highlighted.

I'm betting # 3 will be the result, this will be out of your hair in 3-6 weeks, and you'll be a hero to the client. (Well, except for the $250 you are going to charge the client for writing the letter & preparing the spreadsheet. Those spreadsheets are expensive to prepare).

[Burke]

First make sure that the 1099 income really relates to his business and is not just being funneled thru his S-corp to avoid social security tax. I mention this because I had someone who tried to do exactly that. It could be a mistake on the part of the issuer, but how did they get his SSN? Did he give it to them? Why? Also, often businesses will refuse to issue corrected 1099's if the payment was made to the taxpayer personally, and not to the business.

[geekgirldany]

Thank you guys for answering.

Well I already told the customer to call the issuer, have them change it, and include a letter. I explained to him that if they could not do that then he would need to get bank statements to show me and the IRS where the money was deposited into the S-Corp account. He talked like he would call them to change it. I don't really know how they got his SS#.... that is a good question. I told him that if he had brought me the 1099s when I prepared the corporate then I would have seen the error and had it corrected.