ex business partner apparently turned in a 1099 to the irs regarding my husband...?

Question

problem is my husband was on salary, My husband never signed a 1099 with the company. So we just got a letter from the irs saying we have to pay taxes on almost 12,000 and if we don't pay by this date we will be fined even more etc. What is the best way to handle it with the IRS, isn't that tax fraud, what they are trying.. well what they did? Any help or suggestions will be received with appreciation.

no the ex business partners never sent out any w2's for any of the employees. My husband knows where the accountant's office is, and we will request a copy from her.

yes the company took taxes out of his normal paychecks. the company never made a profit. 1099 is a subcontractor form instead of being an actual employee so instead of signing a w4 telling your exemptions this shows that you are responsible for your own taxes. the 1099 is for the employeer

i'm sorry i was tired last night when i was talking about the 1099 i believe that is the correct document for a non employee

Answer 1

Did your husband get a W-2? Did your husband earn the compensation income from the company? Get your information together, call the IRS number on the notice and explain the situation, offer to send the person the back up documents that you have. make sure whatever you send you keep copies and send by certified mail. The IRS will not let you PDF and email, but they will take faxes. If things do not get resolved with the person you talk to, don't get angry, but you can request to talk to their supervisor and if that does not resolve it, ask to have the matter assigned to the examination division. In that case, you will get a chance for a face to face. If you can't work things out with the examination division, (it used to be the audit division, but that name is misleading), you may get the chance to go to the appeals division. At some point, you may need the assistance of a certified public accountant or enrolled agent.

Answer 2

Did your husband have social security, medicare and income taxes deducted from his paychecks, and does he have pay stubs to prove that, and then file a tax return showing that income, and was that the only money he got from the company? If so, show those to the IRS and you should be OK.

If by "on salary" you mean he got a regular amount paid to him, but didn't have taxes taken out, then he's probably on the hook for the additional taxes.

You said "ex business partner" which would imply that your husband was a co-owner, not an employee, of the business.

You don't "sign a 1099" with a company, you GET a 1099 FROM the company showing what you were paid.

Or did he get a W-2 showing his salary, plus a 1099 for additional income that he never actually received? If he was a co-owner of the business and the business made a profit, then depending on how the business was structured he might owe taxes on his share of that profit, although it usually wouldn't be on a 1099, maybe a K-1.

I'd take all of your tax papers, any paystubs, last year's tax return, and the letter from the IRS to a CPA and let him or her look at it to see what's really happening - that's not totally clear from your question.

Answer 3

If your husband received a W-2 and paid his taxes on that amount and received no actual other monies from the business, his sworn statement may well be enough to get the IRS off of your backs.

If no W-2 was sent and your husband didn't list that income on the tax return for the year in question, he better have hung onto his paycheck stubs to prove what his status was. In that case, you will owe the income taxes on the money but won't owe the Self Employment taxes. The IRS will adjust the penalties and interest to reflect the lower tax liability but you still will have to pay that reduced amount.

Answer 4

you are in trouble, big time with the irs, you dont have to sign a 1099, this is issued as a self employed or contractural employee situation, and is used by a company to show they paid someone an income but didnt withhold taxes,federal,state,fica,futa,and ss. if you didnt include it when u filed u r in deep. and if the company can prove they paid u u r in deeper. did u get a w2 from the company for the year in question? did he indeed make more than the w-2 showed, did u file the w2 and extra income if there was any. believe me i have seen this b4 and its going to cost you a bundle if you did not report all your income, the irs plays hardball and u r not going to win unless you can prove the 1099 is not accurate, but i bet the company has records to show you received the income, be prepared to pony up.