The trick I learned from my CPA was this: Figure out the proper amount and keep the records to establish it. Report that amount on your tax return. Add a statement to your tax return explaining what happened, stating the amount reported, your attempts to get the 1099 amended and the employer’s refusal to amend. It worked for me. IRS didn’t even question it. Forget about arguing with your former employer.
DISCLAIMERâ€”This answer is for informational purposes only under the AVVO system, its terms and conditions. It is not intended as specific legal advice regarding your question. The answer could be different if all the facts were known. This answer does not establish an attorney client relationship. I am admitted only in California. (Bryant) Keith Martin sbbizlaw.com
Get your bank statements and find every deposit made for pay. You better hope you received checks only. If you got paid in cash, I hope you have some corresponding paperwork. However, if you were paid via check, you can show that you only deposited X amount from them, and this puts the onus on them to prove that they wrote checks to you in excess of this, that that you cashed them. If they are going to claim cash payments to you, I would think the burden would be on them to prove this.
But keep in mind, this is your employer. I am not sure what is going to happen from an employment perspective.
Ask your employer one more time to correct the 1099. If he does not, file the return according to your records and make sure you can support your assertion with canceled checks, bank statements, etc. Attach a statement to the return explaining your situation and what you did to try and resolve it.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.