Letter 4552C payer reply (BMF Underreporter)

Template from tincompliance.com. Letter 4552C is sent by the IRS BMF Underreporter unit to a payer when a corporation or trust it paid disputes an information return in an underreporter case (Letter 2531 or 2030). The taxpayer was first told the IRS would contact the payer (Letter 3404C); the 4552C follows on or after the 46th day, and the examiner monitors the reply for 60 days (IRM 4.119.4.21.7.5, Nov. 16, 2020; IRM 4.119.4.24.6.6). The letter asks the payer to verify, not to file a correction; a corrected return is filed only if the original was wrong.

[Payer legal name]

EIN: [00-0000000]

[Address]

[Date]

Internal Revenue Service

BMF Underreporter

[Address shown on Letter 4552C]

Re: Letter 4552C dated [date]; taxpayer [name on the letter], EIN [as shown]; tax year [year]; Form [1099-NEC / 1099-MISC / 1099-K / 1099-INT / 1042-S / other], account or reference [number]

Dear Sir or Madam:

[Payer] has reviewed the information return identified in the above letter against its payment records for [year]. [Choose the paragraph that applies and delete the others.]

A. The return is correct as filed

The Form [1099-type] reporting $[amount] in box [number] to [payee name], TIN ending [0000], for [year] is correct. The amount is the total of [number] payments made between [date] and [date] by [check / ACH / card], under [contract / invoice / account] [reference]. A schedule of the payments, with dates and amounts, is enclosed. The payee's name and TIN were taken from the Form W-9 dated [date], a copy of which is enclosed. No correction will be filed.

B. The return was correct but the payee is a different taxpayer

The Form [1099-type] was filed with the name and TIN furnished to [Payer] on the Form W-9 dated [date] (enclosed). [Payer] has no basis to change the payee identified on that certification. [If the payee has since furnished a different W-9: On [date] the payee furnished a new Form W-9 showing [name / TIN]; a corrected return reflecting it [was filed on [date] / is enclosed].]

C. The return was incorrect and has been corrected

On review, the Form [1099-type] as originally filed [overstated the amount by $[amount] because [reason: a duplicate entry / a payment that was voided and reissued / a payment to a different payee posted to this account] / was issued to the wrong payee / duplicated a Form [1099-K] issued by a payment settlement entity for the same transactions]. A corrected return was filed on [date] through [IRIS / FIRE / paper] showing $[amount], and a copy of the payee statement was sent to the payee on [date]. Copies are enclosed. [If the correction is a Type 2 (wrong payee): the original was cancelled with a zero-amount corrected return and a new return was issued to [correct payee].]

A correction cancels the original in the IRS matching program only if it matches the original on payer TIN, account number and income type; a correction that does not line up with the original leaves both returns in play (IRM 4.119.4.4.5.1). Use the same account number and form type as the original. A 1099-MISC amount re-issued on a 1099-NEC is matched only if the amount is identical.

D. The amount was a nominee or pass-through payment

The payment was made to [payee] as [agent / nominee / escrow holder] for [beneficial owner(s)]. [Payer] correctly reported the payment to the party it paid; the payee is responsible for reporting the amount to the beneficial owner(s) on its own information returns. [Payer] has no record of the beneficial owners.

Contact

The same facts apply to [year + 1] [if so: the IRS may associate this reply with the subsequent year]. Questions may be directed to [name, title], [phone], [email]. [Payer] has not been asked by the taxpayer to disclose any further information and has not done so.

[Signature]

[Name], [Title]

[Date]

Enclosures: payment schedule; Form W-9; [corrected Form 1099 and payee statement]; copy of Letter 4552C

Timing: reply within the 60 days the examiner monitors; a reply after the case reaches a statutory notice (Letter 3219-B) will not be used, and the taxpayer will be told to obtain your documentation directly. Do not send original documents. If four or more of your returns for a year are found to be erroneous, the IRS may add them to its Payer Agent listing (IRM 4.119.4.5.2); a clear explanation here is what keeps a single error from becoming a pattern in the file.