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Written by Annette Nellen | Posted in 1099 or W-2 • IRS Form 1099 Errors

Tax season has started and by now (February 6) we should have our 1099s and W-2s and perhaps a few other reporting forms. We need to review them for accuracy, even forms from the IRS, such as Letter 6419 on the advance Child Tax Credit (see IRS Fact Sheet (FS-2022-5) on possible errors).

Some forms, such as Form 1099-C on cancellation of debt might be correct from the issuer’s tax requirements, but not correct for the recipient. For this 1099-C issue, I’ve blogged on it before (4/13/13 and 6/21/21). The 1099-C instructions also remind the recipient that their debt might not have really been discharged and they should not report the income until the year it has truly been discharged. The IRS doesn’t tell the recipient what to do with the 1099-C that isn’t reportable. That’s too bad because when the recipient figures out it isn’t reportable for the year printed on the 1099-C, the IRS doesn’t know.

I’m working on a paper for a longstanding activity of the Tax Section of the California Lawyers Association to propose that the IRS create a new form to allow taxpayers to reconcile erroneous reporting forms. Beyond the 1099-C issue, I have the following examples of why a form would help.

Form 1099-K that is way out of line with the recipient’s business receipts. Also, starting for this year, there will be more of these forms issued due to the change in the de minimis filing threshold for third party settlement organizations.

Form 1099-INT when the account is owned by more than one taxpayer but only one form was issued.

Form 1099-R for a qualified charitable distribution. While QCD gets noted on the 1040, an explanation on a form might help too.

Form 1098 where the mortgage debt belongs to more than one taxpayer.

What do you think? Any examples you’d like to share with me to support the need for a tax form for reconciling information reports to avoid or hopefully at least lessen the number of notices issued by the IRS asking why the form wasn’t fully reported.

Thanks! Professor Annette Nellen, San Jose State University.

Annette Nellen

Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.