Failure to issue 1099s

[Randy Watson]

I'm aware of the penalties imposed for failing to issue 1099s. Does anyone have a sense as to whether there would be any liability to the recipients? For example, a participant receives a distribution, but did not receive a 1099 and does not report that amount on their personal return. Would the company be liable for the costs (and potentially additional tax owed) incurred by a participant? Granted, the participant knew they received a distribution, but did not report it. Is anyone aware of any caselaw on this? Thanks.

[Guest Harry O]

I'm not aware of any case law but a taxpayer has a duty to report income regardless of whether he receives a Form 1099. Since the taxpayer has that preexisting duty, it is hard to see what damages the taxpayer has against the payor. The payor has some exposure but it should not be material as long as the failure to issue the 1099 was not intentional.