How to solve a fraudulent 1099-NEC?

Forum|Forum|1 year ago
April 15, 2024
5 replies
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A payer I worked for in 2016 sent me a 1099-NEC for the year 2023, when I did not work for them in 2023, and he did not pay me any money in 2023. I know this payer; he has done something similar to me in 2017, sending me and others who used to work for him fraudulent 1099-NEC forms (at that time still a 1099-MISC) to reduce their taxes. Initially, I thought he accidentally filed that 1099-NEC, so I called him to discuss his mistake, but he refused to cooperate. At this point, I realized it was not a mistake but rather intentional.

In 2017, when I received a CP2000 notice from the IRS stating that I owed $30,200 in taxes along with a $6,000 penalty and $2,000 in interest because I did not report $51,000 in nonemployee compensation. I responded to the IRS letter, stating that "I did not work for this individual, and he did not pay me a cent in 2017. I have retained all my job transaction documents in 2017 along with bank statements, and I can provide all my financial documents to the IRS as evidence. I request the IRS to investigate this fraud."

This year, I received another 1099-NEC from him for $15,000. But this time, I do not want to wait for an IRS notice but want to proactively address this before receiving a notice because he has done this for the second time, bothering me and testing my patience.

This time, I want to take action to ensure he never do this again with me in the future. What specific actions should I take? Experts and everyone, please advise me on potential solutions. Thanks so much!

TurboTax Home & Biz Windows

Bsch4477

Employee

You might want to consult an attorney.

ee-ea

Employee

26 U.S. Code § 7434 - Civil damages for fraudulent filing of information returns. If any person willfully files a fraudulent information return with respect to payments purported to be made to any other person, such other person may bring a civil action for damages against the person so filing such return.

TheWisdomAuthor

Thank you, ee-ea. Your information is helpful.

AnnetteB6

Here is a link with information from the IRS:

How Do You Report Suspected Tax Fraud Activity?

@TheWisdom

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Bretonvia

Employee

If you suspect this employer of deliberately (and repeatedly) filing fraudulent 1099s, you can report them to the IRS. They will want to hear from someone like you who has inside knowledge as a (former) employee. You can also claim a reward (a percentage of the money they scammed, I think). To report the fraudulent tax filings, fill out form 3949A and then form 211 (to claim any reward). Given how egregious this employer of yours has been, it might be worth the effort.

See IRS page on reporting suspected tax fraud

"Report suspected tax law violations: Use the Form 3949-A, Information Referral if you suspect an individual or a business is not complying with the tax laws. You can submit Form 3949-A online or by mail. We don't take tax law violation referrals over the phone. We will keep your identity confidential when you file a tax fraud report."

freedomtax1

Hello,

I have the same issue. I have not received IRS letter yet. I am just wondering how did you solve this issue?

Did IRS accept your written statement in 2017?

Thank you

TheWisdomAuthor

Yes, the IRS did investigate and sent me a notice stating that I owe $0 in taxes. If you encounter a similar situation, you might receive a CP2000 notice. This notice will give you three options. If I remember correctly, the options are: 1) Agree and pay, 2) Disagree and… 3) Authorize someone else to represent you in dealings with the IRS. I chose to disagree and sent a detailed explanation of the situation.

royceann

Thank you so much for all of the responses! Very helpful. I am having the same problem: a huge 1099-NEC was filed on me for compensation that I never received by someone who has a a grudge on me.