We have discovered that our source system payment extract is not pulling all of the reportable payments into our 1099 reporting system. We are still working on getting to the crux of the problem and figuring out how far back the problem goes.  It's looking like it goes back to about 2006. Our question is what is our responsibilty to correct past years? We know we need to correct 2010 as we have a vendor that needs a 1099 that we didn't previously issue. But are we required to go farther back or is fixing the problem, correcting 2010 and moving forward an option.  What could we be looking at as far as penalties go?

At our 2010 tennis tournament, a player (athlete) was paid on the spot, but the 30% Federal Tax was not withheld.  The 2010 1042-S provided to the player (athlete) was coded as: Box 1 – 20, Box 2 – 5,000, Box 5 – 0%, Box 6 – 00, and Box 7 - $0.00, with all the other boxes correctly filled in.  At the end of January, 2011 we discovered that the 30% Federal Tax was not withheld so we electronically transferred the monies to: 09455 – Tax 945: Withheld Federal Income Tax: Federal Tax Deposit - For Calendar Year Ending 2010 to cover the Federal Tax not w/h. 

So it appears that we have three errors that need to be dealt with.  First, there was no w/h (and possible miss-coded boxes), secondly, the 30% electronically transferred to cover the Federal Tax was transferred to the wrong account (should had been to: 1042 Federal Deposit), and lastly, correcting the 1042.

We know we have to correct the 1042-S as well as the Form 1042 to reflect the actual amounts paid and withheld.  We have read, and re-read Pub 1042 and Pub 1042-S, but are still unsure how to correct each.

First question:  Since the Federal Tax monies were not initially deducted from the gross amount the player (athlete) received (and we covered the Federal Tax portion), do we have to amend the 2010 1042-S or does it stand correct?  Do any of the boxes need to be re-coded?

Second question:  Can we contact (call) the IRS to have them transfer the monies to the appropriate account?  Is a letter necessary instead?

Third question:  Since we did not correct the Federal Tax Withholding issue until 2011, is this included on the 2011 Form 1042 or do we need to correct the 2010 Form 1042?  Do we include the 30% electronically transferred on line 64 if we need to correct the 2010 Form 1042?

Could you tell me what the Statute of Limitation is on corrections for 1099R's? Ie. if we found a problem with one 1099R in our thousands that we file and find that it has been reported wrong for years... how far back do we have to correct?

What IRC is this in?

We just discovered that we have not generated a 1099 MISC to a rent payment vendor. The oversight was due to the payment was made outside of the Accounts Payable System. Here are the questions:

1. We have payment data from 2008, 2009 – how to file them? I can include 2010 data in the upcoming upload to the IRS.
2. What should we do if we made payments prior to 2008 and the records were purged?
3. Do we include real estate tax in the rental payment?
4. The yearly rental payment is about $ 1.2 MM.

A transaction was processed, check mailed and correctly reported on Form 1099-R.  The check was not cashed and the 1099 was returned as Undeliverable.  In a subsequent tax year, the taxpayer inquires about the transaction because they have received notice from IRS for under-reported income.  The funds have not yet been escheated, so a new, replacement check is processed.  Is there an obligation to "zero-out" the original 1099-R and create a new 1099 for the current year?  Do we need proof of constructive receipt of the check?

We do file 1099 electronically each year.

If there are manual adjustments to be made, is it OK to send those on paper and not electronically?

So IRS would receive manual forms as well as tape - is that OK?

They would be less than 25 as our system is not capable of allowing us to adjust the tape that we send to the IRS.

We sent out a 1099MISC to a vendor showing his name and SSN.  He now wants us to change it to his company name, which he says it should have been sent to in the first place (admits it was his fault), and use the companies EIN.  I have not reported to the IRS yet and wont until the end of April.

1)  Should I make this change?

2) If so, what information, if any, do I need to properly document this change, as all payments in 2010 were paid to his name and not to his company?

3) Just out of curiosity:  Is it true that the vendor can't document the payments as deposited to his company on his side?  The vendor states that, according to his accountant, he will be charged $600+ more in taxes on those payments as the payments are treated as if he were self employed?  I will not discuss with the vendor, but wanted to know for my own.  Does the reporting make that big a difference to the vendor?

Our file has already been sent to the IRS.

A vendor has changed the status and now need to send the 1099 form.

Do I send a Corrected File again or Replacement file?

In 2009 we issued a 1042-S to a recipient who played in our tennis tournament in the amount of $4,634.00.  The proper amount was sent to the IRS for Federal Withholding ($1,390.20) but when the file was sent to our outside client to print the 1042-S form for this player, the withholding was not included on file, thus the $1,390.20 was not reported correctly on 1042-S to the recipient or the electronic file to the IRS.

Then the individual who is over the tennis tournament decided that only 10% (incorrect) should have been withheld for federal withholding instead of the 30%, and issued the player/recipient a check in the amount of $926.80.  We turned around and issued another 2009 1042-S in the amount of $926.80, 0% Tax Rate, and $0.00 Federal Tax Withheld.

This resulted in the recipient/player receiving two 2009 1042-S’s that were both incorrect.  How do I correct this situation?  Do I need to amend both 2009 1042-S’s and reissue a corrected 2009 1042-S with a Gross Income total of $5,560.80, 30% as the Tax Rate, and $1,390.20 Federal Tax Withheld? 

But that still leaves the problem of the refunded amount of $926.80 that actually was not due to the recipient/player and the non-Federal Withholding issue.  Should she contact the recipient/player and request that she write a personal check to refund the monies paid to her in error?  If the recipient/player would refund the monies, I would need to do another amended 2009 1042-S, correct?

If I found out today that we had a supplier that was not marked reportable.  Are we able to send them a 1099 now? I will be filing electronically with the IRS so no files have gone to the IRS as of yet?

I was unable to decipher on the IRS website if we can or can't mail to the supplier 2 weeks past 1/31/11.