Is issuing a wrong 1099 improper?

Sounds illegal and fraudulent to me. Why would anyone do this?

I have a bunch of clients that send a 1099 to my corporation. These are mostly magazines that deal with a lot of freelancers and I figure it is easier and less expensive to send out to everyone then to try and discern who really needs one. Or not send one to someone they should have.

Malicious mischief? Reporting non-existent income to the IRS et al. would force the 1099 recipient to jump through hoops showing that she received no such income, and if she can't prove it, to pay tax, interest and penalty on the phantom income.

What exactly are they sending an incorrect 1099 for? They must have paid your corporation for something.

I am a freelance writer and they are sending my corporation 1099s for the writing my corp did for them. They even use the correct formatting (xx-xxxxxxx) for the Corp's tax number.

Same format for charities, partnerships, some LLCs, trusts, etc etc.

And what's wrong wih doing so? If you submitted a W-9 and checked the corporation box, they are not required, but are allowed to send you a 1099 for services performed.

That should have no effect on you at all.

and where is the error?

It is not needed, so it is wrongly issued (at least to my understanding). That was my only point.. don't know where the others came from./

That's one possibility. Evidently it was seen as enough of a problem that Bill of Rights 2 added IRC 7434, which establishes a civil cause of action by the taxpayer against the issuer.

If someone was issuing false 1099's to back up deductions for phantom expenses that would tilt more toward fraud.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

that Bill of Rights 2 added IRC 7434, which establishes a civil cause of action by the taxpayer against the issuer.

Yes, exactly. The IRS won't follow up on the malicious mischief. The form instructions mention this (civil action by taxpayer against issuer) as well.

I wonder what happens if the payee copy in this situation is mailed to the intended target, but no government copy is filed. This would assume the recipient does not know how, or does not have time, to verify

1099-MISC income reported on their IRS transcript, and yet is not sure of the technical status of the money received and thinks the 1099-MISC might just be valid.

That might be intentional infliction of emotional distress. But if the IRS isn't notified, it may not be a violation of the law that says you can't file a phony 1099.

But if the taxpayer eventually gets an unexpected refund when the government notices that he overstated his income, he might be happy about that. Does the inflictional of emotional pleasing mitigate the distress?

That is a great reference! Thank you.

In this case someone paid me money they owed me, and then issued a 1099int so they deduct it as interest; which it wasn't. They ultimately did a second one for $0 after I incurred legal and accounting fees, and I am suing them in small claims court for my expenses. So your reference is perfect.

Now they are claiming the first 1099 was correct; they just issued the second because it was easier than fighting. If true (and it isn't) it would be an admission they knowingly filed a false 1099 (the second one)

I doubt it. If it were the case, courts would give people who sue for emotional distress an order for therapy or paid vacation. But instead they just get money.

I ran it by my niece who is a rather new CPA. She says she has no idea; they are told just not to do it, but came up with 26 USC § 7207. It refers to "any document", which a 1099INT is, though I suspect it is more aimed at fraudulent returns. Relevant?

Seems like you'd need to prove there was an intent by them to defraud you, in order to regard this as criminal in any way. It doesn't sound like there was any intent to defraud, just a screwup that they were too lazy to correct. Still given the hassle it caused you, you should have some sort of valid civil action against them.

8 months later they agreed to replace it with a correct 1099INT. Their lawyer told my lawyer that it turned out they couldn't use the interest deduction anyhow, so it wasn't worth the hassle. I know that is hearsay and irrelevant, but wouldn't the fact that they refused to fix it for 8 months after their "error" was pointed out to them make it intentional? Its just so frustrating.

Under TBOR, the if the taxpayer has reasonable grounds to challenge the 1099, then the burden is on the IRS to prove it's validity.