Looking for Former DIT unpaid ICs; Question for you now that tax time is here - Curious

Oh, those 2 dreaded words – TAX TIME

Over the past year it seems as though there were more and more MTSOs not paying their Independent Contractors (especially DIT), leaving those MTs with little recourse to collect their wages. 

I have never had contact with DIT, so I am kind of blind in my assumptions, and I may be way off base. If I am, just ignore the rest of my ramblings.  

I assume that as Independent Contractors working for DIT, the MTs were billing or invoicing DIT periodically for services rendered. 

Since those invoices were never paid, I was curious to know if DIT included that amount in the Form 1099 that they send out to the ICs at the end of the year?  

I was also curious as to whether any ICs who were never paid for their services have used the “Business Bad Debts” write-off when they file their Federal Income Tax form? 

Anyone who has been stiffed by an MTSO should ask their accountant if they are eligible to write off any unpaid invoices as “Business Bad Debts.”  It may not get you all your money, but if you can reduce the amount of taxes you own the Federal Government and maybe even get a hefty tax refund from them, that is a step in the right direction.  Also, I would think that if the IRS gets a bunch of ICs writing off “Business Bad Debts” from the same company, that would definitely peak their interest into checking to see if those companies included that income on their own Tax Returns.  I am assuming that as a business, they (DIT especially) have to document their income on their own Tax Returns, and if the amounts do not coincide, they could be in a world of hurt with the IRS – which is exactly what they deserve. 

Hey, it is definitely worth a try.  If you already have an accountant who does your yearly taxes, I am sure they can tell you whether you would qualify for the “Business Bad Debts” deduction, and you would not have to take DIT to Small Claims Court – just let the IRS handle it.   Here is what you can tell your accountant:  “Some businesses (including lone freelancers who may choose to fall under sole proprietorships) are allowed to write off uncollectible invoices as a "business bad debt" according to IRS Publication 525.”

Just a thought.

Hope someone will respond and let me know if they have ever gone this route.  Something has to be done about these MTSOs who abuse Independent Contractors by not paying them thinking the ICs will never be able to collect.  

Good Luck and let’s hope 2011 is a heck of a lot better than 2010 was for some of us.