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Deductions & credits
They can’t legally change the 1099 because both you and the other business are cash basis taxpayers. If the money was actually paid in 2020, that’s what has to be on the 1099. If it was returned in 2021, that is dealt with on the 2021 tax return. You are making the appropriate adjustment on your tax return, and they are supposed to make the appropriate adjustment on their tax return. Fewer than 1% of tax returns are audited, so everyone‘s basically on the honor system. If you really think they are tax cheats, there is a form you can use to report suspected fraud.
December 9, 2021
6:03 AM