FinanceRegs.com » Did IRS’ ‘honor system’ for independent contractors work?

Did IRS’ ‘honor system’ for independent contractors work?

December 9, 2008 by Carol Katarsky
Posted in: 1099s, Communication, In this week's e-newsletter, IRS regs, Latest news & views, Tax compliance

Last year, IRS began telling suspected under-reporters of income that they should either refile their 1040s, or ask payers to “fix” their 1099s. Did it actually work?
Believe it or not, it did. At least for the most part. 

Of the 31,000 independent contractors IRS contacted about discrepancies, 65% took action. 

What’s it mean for you? It may slow down Congress’ push to force all payments to vendors to be reported on 1099s. Unless you love paperwork, that’s a good thing.

IRS is also looking for other “compliance-challenged” areas of taxation to apply a similar soft-touch approach. No word yet on what areas that might be, but we’ll keep you posted.

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