A Closing Agency issued me a 1099NEC

[Cobejulie88]

Hi all, so I sold a home in 2022 and used this closing company in WV. Last week (August 2024) I received a 1099NEC for 2023  from that same closing company for the same amount($178,000) as on the 2022 -1099S from the sale. I only used them for closing on the home, never worked for them. How do I go about this? I contacted them but they said they will fix the error and that was it. Never got anyhing else from them. Is it hard to correct this? Has anyone have this happen to you? Thanks in advance!

[Bsch4477]

Since you have already reported the sale forget about it. In the unlikely event that the IRS questions it you have the documentation that you have taken care of it. 

[Cobejulie88]

Thanks. But the thing is I filed tax for 2022 including the sale. But the 1099NEC is 2023, not even 2022. Thats the problem. I contacted their HR again and still waiting to see what they can do. Very frustrated!!!

[Opus 17]

First, ask them to cancel the 1099-NEC, it is clearly inappropriate.  Keep records of your phone calls and follow up with mailed letters, keep copies and proof of mailing.  Keep records from the closing, including the 1099-S, your HUD-1 closing statement, and other documents, for at least 6 years from the date of the closing. 

Assuming you already filed your 2023 tax return, I would do nothing further at this time.  If the IRS sends you a letter assessing tax based on this "unreported self-employment income", reply with a detailed letter of explanation and copies of your correspondence, as well as a copy of the 1099-S from 2022.

[Cobejulie88]

Thank you. Can I send a letter to IRS about this error before they send me a letter? I really want to get this off my head. 

[Opus 17]

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@Cobejulie88 wrote:

Thank you. Can I send a letter to IRS about this error before they send me a letter? I really want to get this off my head. 

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No.  The IRS doesn't really have a mechanism to take unsolicited letters, it will likely get lost and never associated with your tax return.  If you had not filed yet, you could file by mail (instead of e-filing), and attach an explanation...but even that is not really recommended any more because the mail processing is so inefficient compared to e-filing.

[Cobejulie88]

Thanks. I had file my 2023 tax in february already. How long to take to correct a 1099? I told the closing company I want it fix this week. But they never got back to me. I remember I had to pay someone 1099 once and I had to correct it and my CPA did it right away for me to mail it in like the next day. Not sure why this company takes so long and they have no idea how to fix it, that worry me. 

[Opus 17]

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@Cobejulie88 wrote:

Thanks. I had file my 2023 tax in february already. How long to take to correct a 1099? I told the closing company I want it fix this week. But they never got back to me. I remember I had to pay someone 1099 once and I had to correct it and my CPA did it right away for me to mail it in like the next day. Not sure why this company takes so long and they have no idea how to fix it, that worry me. 

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Assuming the company electronically files their 1099s, they can cancel or reissue the 1099-NEC (with zero dollars) in a few seconds.  Of course, that doesn't mean they will actually do it that quickly.  

[rjs]

The agency is supposed to send you a copy of the corrected 1099-NEC that they filed with the IRS. Ask them for it. The "Corrected" box at the top should be checked, it should show your name and Social Security number for the recipient, and box 1 should be zero (not blank).

You mentioned contacting their HR department. That might not be the best department to be dealing with. HR probably does not file the 1099s. You should try to contact someone in the accounting or tax department.

[Cobejulie88]

Thank you. I've asked them for a corrected 1099NEC and they said they're working in it. And is it ok for the forms to have a wrong address, or do I have to ask them to correct it as well? I noticed they have an incorrect address on the 1099NEC. 

[rjs]

The recipient's address on the 1099-NEC doesn't matter, but if they are sending it to you by mail you have to make sure that they mail it to the correct address.

[Cobejulie88]

Thanks so much. They emailed me a corrected 1099NEC file that they will efile to the IRS. I think I can save that file if the mail never came later. Thanks again!