If you meet the requirements described by DawnC above, and those payments are not taxable, then you can skip reporting the 1099 you've received. There may be an IRS notice asking you to explain why you haven't reported all the income. At that point, you can address that in your response letter to the IRS. If they supply a fax number, I would suggest you send it from a fax machine that gives you an "upon receipt of recipient" receipt to you. Staples machines, I know, do this. If you should choose to mail, I would suggest you send via Certified Mail, Return Receipt Requested. That way you have proof of receipt of filing.
