Q. We received a request for payment to a vendor who would not provide his TIN. We performed backup withholding on the payment. Inadvertently, the remainder of the payment was not coded as 1099 reportable in our system and it was missed on our information return. We received a CP267 from the IRS, stating we have a credit for the withholding amount (since it wasn't included on our form 1096). What should our course of action be? Should we file a 1099-MISC to the individual, file an amended 1099 file to the IRS and wait to get a CP 2100? Or once everything is filed/refilled, contact the IRS and ask that they apply it to that individual?
A. We spoke with IRS information reporting specialist Mr. Esteppe (IE#1001306188) who confirmed that you should go ahead and issue the 1099-MISC to the recipient and to the IRS, recording the amount withheld in box 4. The vendor can use that to claim the withholding on its taxes. File the IRS copy with form 1096—show just this 1099 on the 1096. Then call the number on the CP267 and let them know you’ve filed the 1099 with the withholding noted.