We gave an individual a 1099 for the checks that we gave him. The person picking up the checks and I am assuming cashing the checks was not the payable person that received the 1099. Now his CPA is demanding that we change the 1099 to the other persons name in which the checks were not made out to. What do you suggest?
State/Country relating to question: Texas
Hello and thank you for using Just Answer,If your business relationship was with the named person on the checks and they in turn sub contracted out to someone else, I would not advise you to issue any corrected 1099. I would advise the CPA to have the receiver of the 1099 issue a 1099MISC to the person they sub contracted the work to.
It sounds like their problem is the taxabliltiy of the 1099MISC to the receiver so all they would have to do is issue a 1099MISC to the other person showing the amount they were actually given
Your paper trail needs to include the checks so you should not issue a correction that will interfere with your proof of expenses
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That person said they are reporting to the IRS and in my eyes we have done nothing wrong. But it sound as if the person that was picking up the checks gave all fraud information about the person that the name was in. But in our files we have that persons id dl insurance etc
But even the insurance maybe fraud from the person that was picking up the checks
certificate of insurance
If you followed your regular procedures then you are correct in not issuing any thing now
I guess I am asking what will the IRS think about this?
They will think the person that wants the 1099 changed had better have proof that the person who should have received the income had some better reason that the CPA is giving now
Look at like this
You had a contract with A
A picked up checks in A's name
B got the money
A needs to issue B a 1099 not you
Did I miss the relationshipd here
relationships * sorry
If that was the way it happened then you are fine
Are you still with me?
But example A was fraud
Example B was cashing A checks so B got no funds
Would the best thing to do change our 1099 to B
15years with H & R Block. Divisional leader, Instructor
If there was fraud involved, as long as you acted under good faith then you are still in the clear. If A got the money, and A got the 1099, then B needs to deal with A not you