Has anyone had any experience with a taxpayer receiving a 1099-MISC for what has turned out to be a "PONZI" scheme?
The taxpayer (now client) received 1099-MISC showing income for 2015, but, in fact, did not receive any income during the year from this payor. Cash basis taxpayer.
This was not reported on 2015 tax return (schedule C) now client has received a CP-2000 notice for under-reported income.
The payor(s) are locked up and have been charged with fraud.
Any thoughts or suggestions about how to respond to the inquiry?
Thanks Cathy