USA Question from a non-accountant re: 1099s

[WintryMix]

Hello all,
I am not an accountant. I work in a company that owns and manages several nursing homes from one central office. I work in the accounts payable department.
Over the last few days and weeks I started receiving dozens of 1099s in the mail from various insurance companies of all sorts, stating the amounts they paid out to us over the course of the year 2019.
I didn't know what to do with them, so I approached the controller and asked him. He said "Put them in a folder and hold on to them until I tell you to throw them away." I asked "But don't the accountants need them for when they do their audit?" He answered a simple "No" without explaining.

My question to the forum is this: How can the accountants do their annual audit of the books without the 1099s? Am I witnessing some sort of crime? Or maybe the accountants have some other way of verifying income?

I'd love to hear your thoughts.

 

[Drmdcpa]

1099s do not provide an audit trail. There is no crime.

 

[Werner Reisacher]

Hello all,
I am not an accountant. I work in a company that owns and manages several nursing homes from one central office. I work in the accounts payable department.
Over the last few days and weeks I started receiving dozens of 1099s in the mail from various insurance companies of all sorts, stating the amounts they paid out to us over the course of the year 2019.
I didn't know what to do with them, so I approached the controller and asked him. He said "Put them in a folder and hold on to them until I tell you to throw them away." I asked "But don't the accountants need them for when they do their audit?" He answered a simple "No" without explaining.

My question to the forum is this: How can the accountants do their annual audit of the books without the 1099s? Am I witnessing some sort of crime? Or maybe the accountants have some other way of verifying income?

I'd love to hear your thoughts.

I assume that you are referring to IRS Forms 1099 that you received for transactions during the fiscal year 2019 for payments you received that represent a taxable income. the # 1099 is followed by a letter (a,b,c,div etc) that identify the type of transaction. The purpose of these forms is for the IRS to electronically verify whether a transaction is reported accurately by both parties. The slightest difference is flagged by their computer and you will receive a audit inquiry letter shortly after both parties have filed their taxes. It is important that the person who is filing the taxes of your company receives all of these forms. Otherwise, an audit investigation is guaranteed.
Werner Reisacher

 

[Werner Reisacher]

1099s do not provide an audit trail. There is no crime.

I beg to pardon. The prime reason the IRS implemented the 1099 reporting requirement is to establish an audit trail. Latest forms 1099K require credit card companies to report all transactions carried out by credit card to the IRS. If income received by credit card merchants is not reported accordingly in the books of the company that received the funds, either the State Sales Tax Office or the IRS will step in and audit the accounts. The US tax code falls under the Criminal Justice system and any violation of the tax code is subject to criminal investigation and judgment.
Werner Reisacher

 

[Drmdcpa]

I beg to pardon. The prime reason the IRS implemented the 1099 reporting requirement is to establish an audit trail. Latest forms 1099K require credit card companies to report all transactions carried out by credit card to the IRS. If income received by credit card merchants is not reported accordingly in the books of the company that received the funds, either the State Sales Tax Office or the IRS will step in and audit the accounts. The US tax code falls under the Criminal Justice system and any violation of the tax code is subject to criminal investigation and judgment.
Werner Reisacher

I beg your pardon. You are obviously omniscient and I am but a dolt and lay person. Sorry for putting into question anything and everything you know to be true and accurate. But do society and others a favor, if you can be bothered to be so kind, try to keep your knowledge to yourself. Let us less informed and outright stupid people not be confused by your vast knowledge.