1099-K request correction or leave

[ILLMAS]

TP was sole-proprietor for many years, in 2016 TP incorporated but forgot to change the FEIN on the merchant account and received an IRS notice that he didn't report $XX for 2017 and he paid the tax.  In 2018, TP recieved the 1099-K which again reflects TP SS#, but the sales are from the corporation, at this point in time, you recommend to the TP to contact the merchant service and have them amend the 1099-K, or report the income on Sch C and create an expense "Will be reported on corporate tax return" for the same amount to zero out?

Thanks

[Edsel]

Got to go to the source of the problem - get the issuer of the 1099-K to change the number.  Very difficult to get them to amend the document, and until it is amended, IRS will force taxpayer to claim the income.  They won't respond to letters, they'll say the problem is between the taxpayer and the issuer (and they're right).

You have a more expedient suggestion to try and put this behind you.  If the 1099-K is large, the schedule C will need an eye-opening explanation to justify an expense of equal amount.  I don't know whether your software will allow a "statement" to be entered with their e-filing.  Drake does, but I'm not sure what the IRS does with the statement.

Taxpayer should be told how precarious this expense should appear to the IRS, and take the initiative to get off his butt and take care of this, or he'll have the same problem again next year.

[Lion EA]

Send the 1099-K processor a new Form W-9 immediately.

[RitaB]

23 hours ago, ILLMAS said:

TP was sole-proprietor for many years, in 2016 TP incorporated but forgot to change the FEIN on the merchant account and received an IRS notice that he didn't report $XX for 2017 and he paid the tax.  In 2018, TP recieved the 1099-K which again reflects TP SS#, but the sales are from the corporation, at this point in time, you recommend to the TP to contact the merchant service and have them amend the 1099-K, or report the income on Sch C and create an expense "Will be reported on corporate tax return" for the same amount to zero out?

Thanks

I would do the work around you suggested, entering the amount on Schedule C and then deducting it with an explanation on p. 2.  Yes, of course, your client can ask the issuer to amend the 1099-K, and that would have been a really great thing to do seven months ago.  I would do what is expedient for me, and call it a day, as my friend Abby says. 

Some would say just don't address it on the personal return, let the client get the letter, have a light stroke, (or get mad at you - they do that) and then charge client to explain to IRS what happened.  I really can't charge enough to like fixing these things, and the "fix" is going to be saying exactly what you're saying now.  Additionally, three weeks after you respond to the letter, the client is going to trot back in there with the letter that says, "We got [one of these six things] from you, and we need two months to let it lay around but we'll get back to you.  That's your fault, too.  /s