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  1. #1
    Join Date
    Jun 2008
    Posts
    15

    Default 1099 Shows More Than Actual Payments

    My question involves employment and labor law for the state of: CT
    I am an independent rep, representing a few different manufacturers. One manufacturer, in another state and behind on commissions, makes out weekly checks and mails them when the cash is in the till. It worked well until this year. They are falling farther and farther behind.

    My 1099 includes amounts of about $20k in checks printed but not mailed. I suppose I could get them to send a revised 1099, but my question is, should I? If I force their hand on getting paid, I will probably end up being fired as most of my peers have been. Does the 1099 with amounts reported to IRS but not paid to me give me any edge in collecting either with the IRS or in the case of a chapter 11 or liquidation? Like "if you don't pay me, I'll tell IRS that you reported falsely".

    I know I will pay some taxes for this year on money not received, but if it gives me any edge in collecting it may be worth it. The company is under new ownership and several of my peers have been terminated and are having to sue for payment. They have stopped sending sales information, invoices etc. so the terminated reps are having difficulty even determining what is owed.

  2. #2
    Join Date
    Mar 2008
    Posts
    1,995

    Default Re: 1099 Shows More Than Actual Payments

    If you're afraid of being fired, just file taxes based on what you received. I suppose you are on a "cash accounting basis", and should only report taxes on revenues paid and received.

    Simply include a note with your tax returns pointing out the difference. I was a 1099 contractor for some years, I had a client who had a bookkeeper who had not idea what she's doing, created 1099's for "compenation", but includes ALL payments made to me including for sale of equipment. I did the tax returns using the correct amounts.

    The IRS sent me a letter five years later, and since I invoiced my clients for services and goods separately, I sent the IRS all my invoice copies pointing out the error, and they closed their case.

    BTW, I am in charge of accounting at a non-profit, I am responsible for 1099's, and the IRS does send letters out to the 1099 issuers if the returns from the recipient does not match, as I received such letters. My CPA told me to do nothing, but wait for the subcontractor to approach me first, or wait for her to straightened it out with the IRS herself if she under reported.

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