State Tax Refunds
Reconciling the amounts to report as income on a 1040 with the 1099–G forms that State tax agencies send to IRS has frequently been a little tricky. When the 1099–Gs are showing incorrect information, I have learned that it’s impossible get the State tax agency to correct their mistake, so it is necessary to add explanatory info to the 1040 in order to avoid a document matching error down the road.
I just received this emailed press release from the Arkansas DFA admitting to some erroneous 1099–Gs that they sent to IRS.
Subject: FW: State 1099-G Form Issued with Incorrect Refund Amount
Please review the following press release:
The Department of Finance and Administration announced today that 28,040 taxpayers recently received 1099-G forms indicating an incorrect amount of refund or credit received by the taxpayer. The incorrect forms were mailed to taxpayers between December 22nd and 29th, 2008. The Form 1099-G is a Federal form that the Internal Revenue Service requires to be sent to taxpayers to remind them of the Arkansas Income Tax refund or credit they received during the previous tax year.
This problem occurred because of a computer processing error. When the 1099-G forms were produced, information from 2007 rather than 2008 was mistakenly used to create the forms. The 1099-G’s are currently being recreated using the correct 2008 information. The corrected 1099-G forms will be mailed to the affected taxpayers by January 9, 2009.
We sincerely regret this error and any inconvenience you may have experienced as a result. We strive to provide quality service to the taxpayers of this state. When errors do occur, we will work to correct those errors as expeditiously as possible. If you have any questions or need additional information, please contact: Individual Income Tax at 501-682-1100 (Inside Pulaski County or Outside of Arkansas) or
1-800-882-9275 (Inside of Arkansas, outside of Pulaski County).
As with most cases where an erroneous 1099 is followed up with a CORRECTED one, IRS ends up looking for both amounts on the 1040 rather than ignoring the first one. So, be careful when working on a 1040 for someone who was lucky enough to receive the admittedly incorrect 1099–G from DFA.