You will just report the income to the S Corp, and keep records that this is what you did. You can contact the issuer to see if they will issue a corrected one that cancels out the income.
The issuer can’t fix it and how will the IRS match the payer and receiver TIN if I simply put the amount when filing S-Corp return
Your only other option would be to report the income as self-employment income, and then enter a business expense for the same amount so the net income of the company will be $0.
There is no expense to show for the amount, what kind of expense would I show? What if hypothetically the issuer dies, can the IRS fix the SSN to an EIN, perhaps using a 147C letter, somehow?
Also, can I attach the 1099 and 147C to TurboTax S-Corp tax return ????
The IRS is not going to change the SSN to an EIN; moreover, there is not reason to do so. You can do what either MaryK4 or ThomasM125 suggested. I have personally done what ThomasM125 suggested, both for my personal return and for clients and there has never been an issue: File Schedule C, report the income on the 1099-NEC and add an item under Miscellaneous/Other expenses for the same amount. Call the expense something like "S-Corp income paid to taxpayer in error". Whether the issuer is alive or no dead has no impact on the situation. The IRS just wants to see that income on the 1099-NEC is reported.
Thank you for the clarification. I called the IRS and they told me only the issuer can fix it. So basically report it as Self Employment on Individual tax return and report expense to make it zero. Then also report the income on my business tax return so I get the S-Corp tax treatment?