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I need any and all help you fellow fools can provide me with. Here's the problem: I got a letter from the IRS saying I owe $2000 for not reporting self-employment income last year. The company that I worked for as a specialist in retail sent to the IRS a 1099-MISC stating they had paid me 2 grand. I never received a single dollar from them. The IRS says the burden of proof is on me to prove I never received the money, but I can't use my bank statements as evidence because they "don't know how many bank accounts I have." I have called the IRS several times, they said request a letter from the company explaining you never got the money. Any help is appreciated.
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I would call the company and request they send you a copy of the cancelled check(s) for the purported $2,000 they paid you. If you have a problem, I would contact an attorney to aid you.

Donna
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Oops, it appears the company is stating you received more than $2,000 since the IRS states you owe them $2,000 (which I would assume includes the SE taxes).

Donna
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No. of Recommendations: 33
I got a letter from the IRS saying I owe $2000 for not reporting self-employment income last year. The company that I worked for as a specialist in retail sent to the IRS a 1099-MISC stating they had paid me 2 grand. I never received a single dollar from them. The IRS says the burden of proof is on me to prove I never received the money, but I can't use my bank statements as evidence because they "don't know how many bank accounts I have." I have called the IRS several times, they said request a letter from the company explaining you never got the money.

I realize this is stressful, but it's important to keep your wits about you. There's no way you owe $2,000 on $2,000 of unreported income. I mention this as a caution to go back and re-read all correspondence relating to this before you send it. That said,

1. Write to the issuer asking that they correct the erroneous 1099.

2. Write (don't call) the IRS telling them that the 1099 is wrong, you never received the money, you have asked the issuer to correct it, and while you will provide them any more information they ask for, as they have noted, you cannot prove a negative. Include a copy of your letter to the issuer. Send everything via certified mail.

IRC 6201(d) provides that the burden shifts to the government if you protest a 1099 and cooperate in the resolution of the matter.

Make sure you adhere to all time limits that may come up. This becomes especially important if it gets to the point that they decide they're going to assess a deficiency anyway. You have appeal rights, but you'll lose them if you don't act timely.

Phil
Rule Your Retirement Home Fool
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I never received a single dollar from them.
+++++++++++++
I would ask the company for a copy of the check payment or a receipt that you signed for it. if not then a letter stating that you did not receive the money and the 1099 is an error.
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The company that I worked for as a specialist in retail...

... I never received a single dollar from them.


How did you "work" for them and never receive a single dollar?
 
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The company that I worked for as a specialist in retail sent to the IRS a 1099-MISC stating they had paid me 2 grand. I never received a single dollar from them.
======================

You worked for them for free? You worked for them as a consultant?

Are you on a cash or accrual basis?

If the company is on the accrual basis and you sent them a bill and they have recorded it as a payable, could explain the reason they sent the 1099.

Do they still owe you the money?

Jean
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Thanks for all the help, Fools, your feedback has been helpful, please share suggestions if you have any. To clear up the confusion: my compensation from tommy hilfiger was supposed to be based on sales performance. I was told I underperformed, so I did not get the money. The reason the IRS says I owe them money is because tommy sent them the 1099-MISC stating they paid $2000. I'm not sure whether I should ask for the compensation that Tommy never paid to me or if I should ask them to correct the 1099. I know that I don't owe exactly $2000 to IRS, but after interest, that's how much I owe after rounding. I'm not telling you the exact numbers for privacy reasons. Not because I don't trust you Fools, but because I don't trust Big Brother.
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I'm not sure whether I should ask for the compensation that Tommy never paid to me or if I should ask them to correct the 1099.

Why not both?

If they didn't pay you $2,000 in 2008 (I assume that's the year we're talking about), the 1099 is wrong and should be corrected. Period. End of discussion.

If they owe you $2,000 they should pay you. It will be income to you in the year they do so.

Phil
Rule Your Retirement Home Fool
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Seems likely if they issued the 1099, they also included $2000 they didn't pay out in their expenses. So the company's tax return may also be incorrect.
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It is possible that both the company and you are correct. Did you move soon after terminating employment? The complany issued a 1099, but you didn't receive a copy of the 1099, which implies that the company didn't have your correct address. They may have attempted to pay you and you didn't receive the check.

All states have unclaimed property websites. It may not have been longer enough, but it is easy to check if a paycheck has been escheated to a state (either the state of employment or the state where payroll is handled.)
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You should remember that there is an office in the IRS called the Taxpayer Advocacy office. If worse comes to worse, I would go to the nearest office and give them a copy of everything. If they take your case, you are probably home free except getting the $2,000 apparently owed you.

They did wonders for me when the Philadephia IRS office got off the track.

brucedoe
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