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View Full Version : 1099 issues/audits/ect (?)


Envy Lawn Service
11-18-2006, 01:37 AM
I'm wondering if any of you have ever ran into issues with 1099's?

This could cover any issues, such as...

Audited over a 1099
Not recieving a 1099
Forgetting to file a 1099
Recieving an incorrect 1099
Sub-contractor not filing a 1099

The primary reason I have this issue on the brain is to do with 'what if a sub-contractor fails to file' a 1099 you send? Is this a guaranteed audit situation? Who gets audited? You? Them? Both?...

With those questions asked... how might you handle this situation?...

If you were subbing work to another contractor, all went well, but then that sub-contractor came to you to inform you of a legit "hardship" situation, with severe concerns of foreseeing an inability to meet the tax obligations involved?

What in the crap do you do in a situation like that?

I mean I know dang well I'm doing things like I should, filing what I should, paying my fair share of taxes, ect... but at the same time I don't want to have to assume more tax liability for all the money paid out to a sub. It's starting to play out like a "catch 22" situation, because the last thing I want is to see the IRS pay anyone a visit.

robbo521
11-18-2006, 01:49 AM
well i was hit with this last year and the year before.first i forgot about the 1099 and my tax man had finished.well got the letter from IRS and took it to the tax man and he fixed it and they were happy after seeing the last 3 yrs of papers.then last year turned it in and everything and i guess they picked me!not a worry,tax man did his job and they said it was all good.when i worked on firetrucks Sub-contractor,was not told about the 1099 and the old fart made it for a penny more so he could claim his part,i was pissed and told him i just wont claim it and he said it would be my butt and not his.

Frontier-Lawn
11-18-2006, 11:12 AM
i dont worry about any of it, i let H&R Block handel it and always get the insurance if the irs has a prob they pay the fines and other $ the irs would want. i have only used it once and thay was for a 401k cash out that was listed wrong from citi street. but h&r paid the $998 for me with no probs.

YardPro
11-18-2006, 08:05 PM
if you sent the 1099 to another sub, that ends your concern.

If he cannot pay his taxes, that is his problem.

Josh.S
11-18-2006, 08:34 PM
if you sent the 1099 to another sub, that ends your concern.

If he cannot pay his taxes, that is his problem.

If you don't get audited or anything, what are the odds of him getting busted?

YardPro
11-19-2006, 09:07 AM
he is fine as long as he does not get audited.
you have to be audited to get into trouble.

if the sub DOES get audited, then he has some problems.
he will have to pay at least 3 times the tax amount after all the fines, intrest, etc.

If it is a substantial amount then they will file charges and the courts will administer the repayment..

YOU DO NOT WANT THE IRS ON YOUR BACK.............

robbo521
11-19-2006, 06:01 PM
if you dont turn it in you will get audited one year.because the person that gives it to you will have it on there taxes and then it will be just a matter of time before they find out you didnt put it on yours.

Envy Lawn Service
11-20-2006, 01:02 AM
Well, I have no issues... it's all good on my end because I do what I am supposed to.

The tax burden belongs to the sub, not me. Unfortunately, the reality of this is that the sub is experiencing a "hardship" situation, and will not to meet the tax obligations involved. I hate to add more hardship and burden to the situation by filing the 1099 and passing on the due tax.

But if I do, I can just about guarantee the sub will take a gamble on not filing it and not paying the taxes. I don't know if it is true or not, but I hear that this is NOT a very good gamble. I've heard the 1099's are "referenced" if you will... and it's almost a guarantee of an audit. Is that true?

Of course, first there is the human concern of the fact I don't want to kick a man when he's down. But also I was concerned over the fact that one or both of us may get audited if the sub decided to wager a gamble.

So, not only do I have concern about the sub, but also concern about the gamble causing me to get audited as well if I send a 1099 the sub doesn't claim. But from what I am reading here, the sub will be the one to get audited and it will not effect me at all?

It's not that I fear an audit or anything. But let's be honest here... nobody wants to get audited, and everyone would rather avoid it, especially guys like me who keep the books/tax accounting 'in-house' like I do.

Frankly, I'm not worried at all about my tax situation. What concerns me is when a good person comes to you and basically says hey I'm down, how about not kicking me while I am.... well you have to be concerned with how they might take that personally when you do it anyways.... especially if they make the wrong choices and end up in a bunch of tax trouble on top of everything.

Really, I don't care who you are or where you are in the USA... if you run into this with a subcontractor, you have to be concerned a bit. The reason being is that years ago, prior to ever using my first subcontractor, I consulted an attorney in order to make sure I was dotting my i's and crossing my t's properly for everything and following the code to the letter.

Well, that attorney was quick to tell me up front that the tax code was not written in black and white in this area. But instead it was purposly written with a lot of gray area open to the interpretation of the IRS, depending on a case by case basis. He also pointed out that in this business and many-many more that there was no absolute way to guarantee passing the IRS test in every subcontract situation you might engage in... despite the fact the other company is legitimately acting as a subcontractor for you.

In the end, something like this can open up a can of worms, and more aggrivation.

robbo521
11-20-2006, 01:44 AM
But if I do, I can just about guarantee the sub will take a gamble on not filing it and not paying the taxes. I don't know if it is true or not, but I hear that this is NOT a very good gamble. I've heard the 1099's are "referenced" if you will... and it's almost a guarantee of an audit. Is that true?


i have had it done twice and it is a bad feeling,it scared the crap out of me and even have a tax man.i am going to send you a im.