Letter 4552C: Business underreporter: verification request to the payer who filed the 1099

What Letter 4552C is

Sent by the BMF Underreporter program to a payer when a business taxpayer disputes a 1099 the payer filed (wrong amount, not its income, duplicate). The taxpayer is first told of the third-party contact (Letter 3404C); the 4552C goes to the payer on day 46 and the reply is monitored for 60 days (IRM 4.119.4.21.7.5). A payer whose 1099 is confirmed wrong should also file a corrected return; the letter itself only asks for verification.

The deadline

60 days monitored for a reply.

What to do

Verify against your records and answer in writing; if the 1099 was wrong, file the Type 1 or Type 2 correction and say so in the reply.

The business underreporter program

For decades the IRS matched information returns only against individual returns, producing the CP2000. The Business Master File underreporter program extends the same matching to business returns: the Forms 1099-K, 1099-MISC, 1099-NEC and 1099-INT filed under a business's EIN are compared with the income the business reported on its Form 1120, 1120-S or 1065, and a discrepancy generates a notice to the business. When the business disputes a 1099, saying the amount is wrong, the payment was not its income, or the same payment was reported twice, the program does not simply take its word. It first notifies the business that it will contact the payer who filed the return (Letter 3404C, the third-party contact notice required by IRC 7602(c)), then sends the payer Letter 4552C asking it to verify what it filed.

Answering as the payer

Verify the 1099 against your payment records, the vendor's W-9 and the payee TIN, and answer in writing within the window on the letter; the IRS monitors the case for 60 days before deciding without you. If the return was right, say so and attach the supporting detail (invoice numbers, payment dates, the W-9 name and TIN). If it was wrong, the letter does not correct it for you: file the correction as well, a Type 1 correction for a wrong amount or a return that should not have been filed, a Type 2 for a wrong payee name or TIN, and say in your reply that you have done so. A payer that filed a 1099 under the wrong business's TIN has also created a mismatch on the right payee's account, which the corrections page covers. The payee CP2000 guide is the individual-side version of the same situation.

Questions about Letter 4552C

Have a different notice? The IRS notice decoder lists all 77 in the order they tend to arrive.