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IRS Notices Regarding Unreported Income

By: Charles L. Telk Jr., CPA, Partner email

Recently we have seen a new type of IRS notice that I have not previously seen in my 28 years of practicing public accounting. The IRS sends a letter to a corporation assessing additional tax on “unreported income”. The source of this unreported income are 1099’s that were sent to the IRS. Except in rare cases, payees are not required to send a 1099 to a corporation.

Furthermore, corporations (including cooperatives) are generally not required to reconcile their reported income to any 1099’s that may have been received.

Bottom line – these notices are in error and in these cases – no additional tax is due. If you receive a letter from the IRS assessing additional tax due to “unreported” 1099 income – please forward to Chuck or Cristina in Des Moines for immediate attention. The IRS return address on these notices is Rulon White Blvd in Ogden – rather than the typical IRS notice that only has a City/State address.