Posted by desktopfull on 3/8/10 10:35am
Msg #325870

Heads up on NREIS issue of 1099's

I notified NREIS that my 1099 was incorrect and wanted a corrected one issued. So far no response on the 1099. BUT, on Thursday NREIS emailed me a listing of my closings that I am owed for and it lists out: check #xxxxx issued 12/15/2009; check#xxxx issued 12/30/2009; check #xxxxx issued 01/15/2010; check #xxxx issued 01/31/2010 all to be mailed on 03/22/2010.

The difference in what I received and their 1099 are the two checks they printed but never mailed, so they can claim the deduction on their taxes. If I don't get a corrected 1099 from NREIS I plan on printing out the email and attaching it to their 1099 as proof that they never paid me the money in 2009 and weren't sending it until the end of the first quarter in 2010. Don't let them get away with doing this to you either.

Reply by Lee/AR on 3/8/10 10:40am
Msg #325871

This truly sounds to me like a company in trouble.

Reply by Linda_H/FL on 3/8/10 10:44am
Msg #325873

Can't you report them to IRS?...just a thought n/m

Reply by PAW on 3/8/10 12:37pm
Msg #325892

Not an uncommon experience

NREIS may consider the file paid, for tax purposes, on the date the file closed, regardless of whether or not you have received the payment. Of course, you are figuring your taxes based on the "cash" method so it would be 'short' for 2009. This is not uncommon and nothing to worry about. You report your income the way you want, cash or accrual, and they report the way they want. It'll all come out in the wash.

I work on a accrual basis, so my figures quite often do not match some companies when an assignment is completed in December.

Reply by MikeC/NY on 3/8/10 5:39pm
Msg #325973

As PAW said, it depends on your accounting basis. Most of us are on a cash basis, so we book the income when the check is received; that is when the IRS considers it to be "earned". If you were on an accrual basis, you would accrue the income as a receivable when your invoice is issued, then move that to cash when (and if) the check is received. In that case, you "earned" the income once it was accrued - you're just accounting for it differently. BTW, this is also why you can't write off bad debts if you're on a cash basis - you never "earned" the income as far as the IRS is concerned, so there's nothing to write off...

Payables are booked as paid when the check is cut, with no concern to when it will be mailed. They are not wrong in including those two December checks in the 1099, even though they're still sitting on them. In my former life, I spent 10 years writing and supporting software for a corporate A/P and A/R departments; this question came up all the time regarding December payments, and the answer was always the same - A/P shows it as paid on the date the check is cut, and that's what gets reported to the IRS. The chances of you getting a corrected 1099 in this case are slim and none.

It's different if they've jacked up the amount they say they've paid you to include work you've never done - then you need to contact the IRS, because the company may be involved in some type of tax fraud. What you described may be a questionable business practice, but it's not fraud.

Your return should always reflect what you actually earned, based on your accounting basis, regardless of what the 1099's say. The chances are you've got less reported on all 1099's than you earned, since companies aren't required to 1099 if they paid you less than $600. As long as the income you report is not less than the total of the 1099s you received, there's no problem - just be honest and accurate, it all washes out from year to year.

Reply by desktopfull on 3/8/10 5:59pm
Msg #325979

The 1099's are to reflect what was actually paid to the person receiving the 1099. They are reporting considerably more than I actually received. I don't care what accounting method they are using. I was told by the IRS to get a corrected form, provide proof to the contrary, or pay the tax on the amount reported. They told the IRS that their form was correct and provided a list of checks that I was supposed to have received. Two of those checks on the list they provide to the IRS were just listed on an email to me from NREIS which stated would not be mailed until 3/22/2010. So, I will be using the email as my proof that the amount I am reporting is correct and their 1099 is wrong.

Reply by MikeC/NY on 3/8/10 11:44pm
Msg #326029

No, the 1099s must reflect what was paid out - not what the person on the other end received. Their accounting system has no idea when the check was mailed, received, or cashed - it only knows when the check was cut. They're not reporting what you received - they're reporting what they paid out and when they paid it. The fact that you haven't received the money yet is irrelevant, as is what you care about their accounting methods. They're not going to provide a corrected 1099, because what they reported is what their books show. It's legal, so just deal with it.

It all washes out in the end - not everyone sends a 1099, so this should really not be issue. I really don't understand why those 2 checks are such a big deal - most of us see discrepancies like this every year, but it's usually more than offset by income that was NOT reported on a 1099. What you earn is almost always more than what was reported to the IRS by the companies who paid you. Just report what you actually earned and don't worry about it - that figure is going to higher than what the IRS expects, so what's the problem?

OTOH, if the ONLY income you are willing to report is 1099 income, and you're fighting this because it forces you to declare more income than you want to (which is what this is starting to sound like), then you're probably trying to under-report your income... You're on your own with that one...