What to do when you get a 1099-misc when you shouldn't have.

[fretfull]

This is a question concerning the United States.

This year I received a 1099 for 2017 due to referrals when I shouldn't have. The payments were all made through PayPal and thus not subject to a 1099-misc. For years this company would say they would issue a 1099-misc and I explained to them that the payments weren't subject to one because of PayPal. This year they sent me one anyway even though they don't have my TID. I've tried contacting them to request that they issue a corrected 1099 since there shouldn't be one anyways. They do not respond.

What should I do in this case? It doesn't look like they will issue a corrected one. They aren't responding at all so I don't even know how I would give them my TID for them to issue another 1099 with my TID. How will the IRS deal with this 1099 since the TID is missing. What should I do?

[keyplyr]

What should I do in this case?

We are not tax attorneys and cannot give legal advice. Any comments from Webmaster World members should be considered as opinions only.

We do recommend you consult proper legal advice.

[fretfull]

Sorry. I just thought someone else may have run into this situation.

[keyplyr]

Yes, it is possible someone here will have experience with this.

How will the IRS deal with this 1099 since the TID is missing. What should I do?

I'm just clarifying that anything other than direct legal advice from an attorney will be an opinion, nothing more.

[LifeinAsia]

The payments were all made through PayPal and thus not subject to a 1099-misc.

Can you explain why you think this? Income (regardless of the method of payment) is still income and subject to taxes.

How will the IRS deal with this 1099 since the TID is missing. What should I do?

Although the IRS uses antiquated technology, being able to match an address to a taxpayer doesn't require IBM's Watson. If/when the IRS gets around to auditing you for not including that income on your tax return, you'd better have an ironclad reason why it's not taxable income (thus my original question).

[lucy24]

Can you explain why you think this?

I was hoping he meant that PayPal itself reports all payments over some threshold (er ... don’t they?) so the same income would potentially be reported twice.

[LifeinAsia]

I was hoping he meant that PayPal itself reports all payments over some threshold

Gotcha- I completely forgot about that "electronic payment" clause for 1099-MISCs.

In this case, I don't know how much good being preemptive will be, but you could send a (certified) letter to the IRS with copies of both 1099s and explain that the company incorrectly sent you a 1099-MISC because all payments were made through PayPal (which sent you the 1099-K) and that said company has not issued a corrected 1099-MISC despite repeated requests to do so.

I might also send a copy of the letter to the company as well. Putting them on the IRS radar may make them more likely to pay attention in the future. Then again, it may also piss them off, decide that you're not worth the trouble, and drop you.