Eight years ago I consulted with a company. In addition to paying my invoice, the president of the company gave me season football tickets. When I received my 1099, the value of the tickets were not included and I assumed it was a personal gift from the pres. Now, eight years later, he is threatening to issue a corrected 1099 including the value of the tickets.

Can he do that?

If so, how can I go back that far and file an amended return?

Hasn't the statute of limitations run on this transaction?

asked 01 Feb '11, 20:01

Jeff%20Johnston's gravatar image

Jeff Johnston
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edited 03 Feb '11, 05:07

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TaxQueries ♦♦
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The first question I have is WHY is he threatening this now? Something has happened and what that was matters. If he's threatening you with something it could be considered criminal extortion and you may want to talk to an attorney. If he follows through you may want to talk to the district (or State) attorney about prosecution.

If he issues a 1099 NOW for something that happened 8 years ago he faces penalties for late filing and willful disregard of the reporting rules. So it is highly unlikely that he will actually do this. On the other hand, the penalty for late filing of a 1099 is only $50.

Should he issue you a 1099 NOW for something that happened 8 years ago AND include it on a CURRENT 1099 he could get into a lot more trouble for false reporting and intentionally misrepresenting information to the IRS.

So, I'll ask - what is really going on? What's the back story here?

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answered 01 Feb '11, 21:11

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EAgent
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Yes, it would definitely help to know the backstory, as it sounds like this is the least of your worries. Expounding on EAgent's response, this individual could be dangeours. Typically, when someone makes threats of this nature, they are experiencing some type of difficutly that could have legal or criminal consequences. I hope this is the extent of the involvement you've had with him. Good Luck!

(03 Feb '11, 14:11) Kristy M. W.

I agree with the other responses. The statute of limitations on your tax return would seem to be long over, so the issue is moot. The IRS cannot assert an any additional tax.

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answered 02 Feb '11, 01:37

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Bill-EA
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To expound on what cpaboise stated:

The statute of limitations is only 3 years for tax returns. The IRS cannot seek information older than that unless there is evidence of negligence (gross understatement of income, etc = extends statute to 6 years) or fraud (willful disregard of law - no limit on the statute).

And the negligence and fraud have to be the fault of the taxpayer, not an outside party.

It's an empty threat, and it's been said by others that it would do more harm than good for him to change the 1099.

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answered 03 Feb '11, 04:47

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Jayson Wiser
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The IRS can't raise issues after three years and the taxpayer cannot get a refund after three years (in most cases) but you certainly can file an amended return and pay additional tax (grin) - the penalty on late filed info returns is now $100 per form (not $50) (Jobs Creation Act of 2010) for returns required to be filed after December 31, 2010. But I agree that this is a non-starter - you billed, the company sent an info return, the IRS has been long since satisfied that your return was accurate - and I also don't get the threatening part - threatening suggests that there is something he wants you to do so that he won't issue the 1099 - If he HAS to issue the 1099 - why is he threatening? Why not just do it? There is something much deeper going on here.

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answered 04 Feb '11, 06:20

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Pat Haggerty
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I'd be more concerned about the "threatening" part-why, all of a sudden and after so many years, is the president wanting to reissue a 1099?

Can he do that? Of course, but chances are it will not make a huge difference in the grand scheme of things to reissue your 1099. Is he having to do this for many other 1099 recipients because of an audit or other inquiry? This could be the reason behind it.

You can't, however, amend a return more than 3 years in the past. You can only respond to an inquiry by the IRS or other taxing authority, and even if the IRS receives one corrected 1099 (yours), it is unlikely they would pursue it unless the amount of tax they expect to collect is substantial-more than what it would cost to correspond with you.

If you billed the company and they paid your total invoice, and you reported that as income on that year's tax return, you reported in good faith. Your interpretation of the gift, as long as it was not given as a part of the agreement to complete your contracted work or discussed as a condition or bonus for completion, can be correct. That is not to say you won't be taxed-the IRS and other taxing authorities may see it otherwise.

Don't worry too much about it unless you actually receive a corrected form 1099. Then consult with a professional-a CPA or tax attorney-to determine your response or action.

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answered 01 Feb '11, 21:12

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cpaboise
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Technically, you can amend after the three year deadline. Almost no one does, because 1) Even if the amendment shows you were entitled to a larger refund, the IRS does not pay it, and 2) If you owe the IRS a small amount, and they have not noticed yet, they probably will not.

However, there is no rule that actually forbids you from filing an amended return, even 40 years late. It is just fairly pointless.

(13 Feb '11, 15:26) stephenweins...

Let him file it. Although he technically could file it now, doing so would have no effect on you. It is too late for the IRS to go after you for the taxes that would have been due if he had filed it promptly.

On the other hand, you should have included the tickets in your income, even if they were not on the 1099. Gifts from clients are taxable, unlike gifts from family or personal friends. However, it is too late for the IRS to go after you for the taxes on it now.

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answered 13 Feb '11, 15:29

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stephenweins...
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Asked: 01 Feb '11, 20:01

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Last updated: 13 Feb '11, 15:29