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No. of Recommendations: 2 has uncovered an Ally Bank hornets' nest of potential problems in crediting and reporting CD interest. Apparently they blame the problem on computer error, but don't plan to correct it and issue new 1099's except for customers who call it to their attention.

(You have to read the comments at the bottom of the page to get the full picture.)

My question is -- if a financial institution issues an incorrect 1099 on which income is under-reported and the taxpayer doesn't catch it, is the taxpayer then liable for penalties and interest?

When a CD matures, I can use one of the online calculators to make sure I was paid the correct interest in total, but I'm darned if I can figure out whether the yearly APY is correct. Any suggestions?
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