What to do when a company won't give me a correct 1099?

March 20, 2009 1:17 PM

A client sent me a incorrect 1099-MISC and now refuses to correct it. It's in their tax favor. What can I do?

(No, you're not my accountant. But my accountant isn't going to get back to me until Monday and this is going to bug me all weekend.)

So they say they've paid me a several thousand dollars (and change) more than they did. This gives me a higher tax burden and them a tax break. It's not an accounting error. I've compared my invoices to my deposits to verify my number. And it's not "a check or invoice crossed the new year" problem. They report a suspiciously round number, the actual number is one of the least round numbers I've ever seen.

I stopped doing business with them early in the year because they refused to pay me. There were some bad words and letters from lawyers sent, and apparently now they're not talking to me at all. Emails, phone calls and letters directed to personal and business addresses have all gone unanswered. I'm not even sure they're still in business.

Do I report the correct amount and deal with the inevitable IRS inquiry, tip them off to the IRS beforehand, or suck it up and pay the extra tax as a "not worth the trouble" fee?

posted by Ookseer to work & money (7 answers total)

Hmm... perhaps you could send your own 1099 right back to them?

No, I'm not an accountant, and this is just a guess. Interesting problem. I would personally do #1 and 2 in your last paragraph, but by all means listen to your accountant. Keep a record of your attempted communications to show the IRS if they ask.
posted by alexei at 1:35 PM on March 20, 2009

Do they owe you money? How much? Is it worth it to talk to your lawyer again and see if this can be used for evidence that the debt is owed?

Wait for your accountant's advice. This isn't going to get worse over the weekend. Don't worry, you are unlikely to have to pay this.
posted by grouse at 1:38 PM on March 20, 2009

Here's an accountant's advice: What do with an incorrect 1099.
posted by bigmusic at 1:42 PM on March 20, 2009 [1 favorite]

Ask TaxGirl!
posted by Blazecock Pileon at 1:53 PM on March 20, 2009

Bigmusic's link looks definitive.
posted by WCityMike at 3:34 PM on March 20, 2009

Sue them in small claims court for remainder of the difference between what you were paid and what they claimed to pay. Not only would you score that extra money...you would also piss them off quite a bit. Also...in my amateur-suing-the-hell-outta-bastards opinion...judges LOVE to see shit like that.
posted by hal_c_on at 2:27 AM on March 21, 2009

Thanks for the much better links than Google was giving me. (Which were all telling me to wait for the IRS to notice, which in the past has been much less than fun. Half the point is getting the IRS not to notice me.)

Sue them? Oh hell no. My time is more valuable spent on non-spite related activities. Besides they, both as a company and individually, have already been pretty much destroyed by their reputation. (Ain't social networking grand?)
posted by Ookseer at 1:13 PM on March 21, 2009