If you own a business you know that when hiring independent contractors, a 1099 form must be given to them by the end of the year. A 1099 form is used to report to the IRS how much money was paid to that contractor throughout the year. It’s important to note that a 1099 and a W2 form are different in the sense that a W2 form is only given to the employees that are working within your business, and a 1099 form is only given to independent contractors that provided a type of service to your business but are not employed within it.
Now that “Tax Season” is over and businesses have already filed their tax returns, some business owners will start receiving an IRS Notice CP2100 regarding the information reported on independent contractors. These notices go out for a variety reasons. If the name of independent contractor was misspelled, if a typo was made on the 1099 form, or if social security number and name don’t match up with the government records.
Maybe the name of the contractor was foreign or hard to spell, so a mistake was made when filling out the 1099 form. With all the information that has to be input in one 1099 form, it’s possible to make a mistake. The IRS will usually simply notify the business so that in the next year, if same independent contractor is hired, the same mistake does not occur.
Another reason could be that maybe the name that was written on the form was not the contractors legal name.