Effective for forms filed in 2017, Congress provided that businesses (“payors”) do not have to correct “small” errors on Form 1099s and Form W-2 that they issue. Errors are “small” if the error is $100 or less in dollar amount or $25 or less in withholding. The IRS uses the information returns (wages, interest, dividends, rent, law suit settlement, etc.) to match the figure reported on the Form 1040. Therefore, if the recipient does nothing, he will be penalized by the IRS for failing to report consistently with the “small” error shown on the Form 1099.
If the recipient wants the payor to correct the “small” error, he must make a special election with the payor to force the payor to correct the “small” error. The payor has 30 days to make the correction. Unless the payor provides specific instructions on how to make the election, the recipient must make a written election for the calendar year with following information:
Example of Election to Reject “Small” Errors:
I elect under 26 U.S.C § 6722(c)(3)(B) to have you correct de minimis errors on my information returns.
My name and address is:
Tom Q. Public
123 Main Street
Anytown, PA 15000
My tax ID number is:
XXX-XX-XXXX (write your number here)
This election applies to all accounts I have with you and all information returns and to all future tax years, unless I set out any exceptions below.
You should mail this election to the payor at the address shown on the erroneous Form 1099 or Form W-2. Notice 2017-09, www.irs.gov/pub/irs-drop/n-17-09.pdf
Strassburger McKenna Gutnick & Gefsky can help you correct tax related errors. Please contact John Kelly, firstname.lastname@example.org or Dave Pollack, email@example.com at (412) 281-5423 for help with tax matters. This post is provided for informational purposes only. Nothing in this post creates an attorney client relationship.