First, to whomever,thank you for reading this

My husband is a physician and until Dec. 31, 2006 functioned as a sole-proprietor

We incorporated effective Jan. 1, 2007

January 31st we had our first child who stayed in the intensive care and spent the following 5 months with colic/screaming.

We have a new ein/tax id for the corporation.

We waited until the last minute to notify our companies that pay us for services rendered (blue cross, medicare etc.) of our new tax id number

We haven't heard back and the checks still say the old tax id number at the top

We know 1099's will most likely run next week.


How do we fix this? I mean the fact that almost all of our income is evidently being recorded under the old tax #

If the income is reported to the IRS through our old tax id # shouldn't it boot back b/c that number is no longer in effect?

Can we notate when we receive the 1099 that a correction must be made?

We aren't trying to do anything wrong...we messed up and waited until December to start working on this,I know,stupid,but we were swamped with a sick child...

I'M so scared! Someone tell me there is light at the end of the tunnel?

Worst case scenario couldn't we file an extension while we get all this info straight?

Thanks for any and all help

MukatA

Incorporated? What type of entity?
LLC as sole proprietor, as partnership or as a corporation; C-corporation or S-corporation.

Also what benefits did you expect by incorporation?

gusmeg

Thanks for the response...we are an S-Corp as a "pass-through" entity

We incorporated mostly for legal protection from any potential malpractice...our malpractic company highly suggests incorporated status...

Also, we will draw about 20% of our income as a dividend and this will help us with our taxes...

MukatA

Since it is a S-Corporation, at the end of the year the corporation will "pass-through" the profit to its share holders by issuing K-1 forms. Share holders will report that as their income.

So it won't make any difference to you tax wise if you directly get payment from the companies in your own account or it is paid to the S-corporation. Yes, you lose legal protection of S- corporation.

AtlantaTaxExpert

When you get the Forms 1099-MISC with the OLD tax ID number, notify the compathat the tax ID # is incorrect and request that they issue a corrected copy using the new tax ID #.

Since the work was done under the S Corp, the income should be recorded on the S-corp's tax return, then "passed-through" to you, even if the Form 1099 is under the old tax ID #.

This will not cause a HUGE problem if the money is reported correctly. The IRS may ask about the 1099s under the old tax ID #, but if you report it on the S Corp's tax return, you can merely refer them to that return.

Mobea

You're right ATE but I would add a note to the return that the 1099 was issued under the old number xxx-xx-xxxx in error and is included on the corp income EIN# xx-xxxxx just so the IRS gets a clear picture of it. As long as the IRS can tie all the figures together, it will work. Even so, we wouldn't want to confuse little old IRS.

AtlantaTaxExpert

Confusion at the IRS only hurts the taxpayer, so your advice about rectifying the ID # is good advice.