In the event an American taxpayer submits an erroneous tax return to the Internal Revenue Service (IRS), what happens next depends on the type of error. On a return with simple arithmetic mistakes, the agency will generally correct the return and forward it through the processing procedure. Additionally, an attachment inadvertently left off may not require correcting if the pertinent information is included elsewhere on the return. However, if the taxpayer receives a 1099 form after filing taxes, in most cases an amended return should be filed.
Form 1099 Functions
The IRS refers to 1099 forms as "information returns." Businesses utilize information returns to report particular transactions to the IRS. For example, pension and annuity funds report to the IRS using Form 1099-R, capital gains distributions are filed on Form 1099-DIV, and refunds of state and local taxes on Form 1099-G. The 1099-MISC form is used to provide data to the IRS for a number of types of income including non-employee compensation, the type often used to pay independent contractors or the self-employed who complete a job for the business.
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Matches Pertinent Data
Businesses required to file Form 1099 for certain transactions file one copy of the 1099 with the IRS, as well as providing the taxpayer with a copy. Thus, if the issuer of the 1099 form followed correct procedure, the IRS already has the information on file. The taxpayer's return should match the data provided by the business that filed the 1099.
Form 1040X - Amended Return
Data on 1099 forms affect income and the IRS makes clear that incorrect reporting of income is one of the specific reasons a taxpayer should file an amended return. Furthermore, transactions reported on 1099 forms may affect tax return form sections on deductions, tax liability, payments and refunds. File Form 1040X to amend federal tax returns 1040-EZ, 1040-A, and 1040. A copy of the omitted 1099 form should be attached and filed with the amended return only if federal taxes were withheld.
The Internal Revenue Service processes thousands of amended returns each tax year. According to the IRS, an amended return requires eight to twelve weeks to be processed after it is received. Timely filing of an amended return is recommended, as the IRS may charge interest and penalties in situations where the taxpayer was negligent. Guidelines provided by the IRS instruct a taxpayer who may have received a refund check based on an erroneous return not to cash the check, but to return it with a letter of explanation, with "void" written in the endorsement area on the check.