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Subject:  Re: 1099-MISC form Date:  6/26/2010  12:10 AM
Author:  TMFPMarti Number:  110609 of 127613

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.

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