Sec. 7434 Claim Can Proceed Where W-2 Employees are, Instead, Fraudulently Issued Forms 1099

Taxes - The Tax Magazine, Vol. 97, No. 7, 19 (July 2019)

5 Pages Posted: 24 Feb 2020

Date Written: July 1, 2019

Abstract

In Greenwald v. Regency Management, LLC, the Maryland District Court permitted a Sec. 7434(a) claim to proceed where the firms former employees were issued Forms 1099, as independent contractors, instead of the Forms W-2, as employees, that they had received from the employer in previous years. Sec. 7434(a) permits an action for civil damages against individuals who file fraudulent information returns. The application of Sec. 7434 has not been uniform across the district courts that have considered it.

Greenwald, and similar cases discussed in this article, focused on the issuance of Forms 1099 to individuals who should have, instead, received a Form W-2 from the employer. Sec. 7434(a) creates a significant private right of action against those employers, separate from the administrative remedies available via the Internal Revenue Service.

Keywords: Employee Classification, Gig Economy, IRS, Form 1099, Form W-2

Suggested Citation

Colella, Frank G., Sec. 7434 Claim Can Proceed Where W-2 Employees are, Instead, Fraudulently Issued Forms 1099 (July 1, 2019). Taxes - The Tax Magazine, Vol. 97, No. 7, 19 (July 2019), Available at SSRN: https://ssrn.com/abstract=3543061

Frank G. Colella (Contact Author)

Pace University ( email )

One Pace Plaza
New York, NY 10038-1502
United States

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