Paul L. Caron

Wednesday, September 27, 2017

Follow Up On § 7434 Suits For Filing False Information Returns

ABA Tax Section (2017)I previously blogged about a great panel presentation I attended at the Fall ABA Tax Section Meeting in Austin. The presentation was about how to sue someone under § 7434 for filing a false information return.

This past week one of the panelists, Stephen Olson, has blogged more about this subject here and here.  The blogs are worth calling to your attention. He dives a bit deeper into this subject to look at whether an Information Return that states the correct payment amount but is otherwise false and misleading, is sufficient to support suit under § 7434.

I won’t spoil the bottom line for you except to say it appears that the trend is to not allow such suits when the error is not as to the amount of payment. If the only error is that the payor---even with bad intent---selected the wrong Information Return (a 1099 instead of a W-2, e.g.) or even intentionally misstates information on the form but still has the correct amount of payment, then courts will dismiss a § 7434 complaint under FRCP 12(b)(6) for failure to state a claim on which relief can be granted.

So if you REALLY want to mess with someone who you have paid some money to ...

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