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Letter 6638: what it means and what to do
Got an IRS Letter 6638? Here is what it means, your deadline, what to check before you answer, and how to reply. Check your own letter free: it stays on your phone.
Check my Letter 6638 freeWhat the IRS says this notice is about
This educational letter informs you that we received your Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B) , showing you made payments but didn't file the required information returns. No response is required.
Your deadline
Answer by the date printed on your notice. If there is no date, answer as soon as you can, and call the number on the notice if you need more time.
What to check before you answer
File the missing return, or explain why you did not have to
If you already filed, send a copy and the date you filed. If you were not required to file, say why. Otherwise file now: the IRS may prepare a return for you without your deductions.
Is this letter really from the IRS?
The IRS writes first by mail. A real letter shows a notice or letter number, your name and part of your tax ID number. The IRS does not ask for payment by gift card, crypto or wire transfer. If in doubt, sign in to your IRS online account, where many notices are listed.
Common questions
When do I have to issue Form 1099 to an attorney?
Generally, if you make a payment to an attorney in connection with legal services, you must issue the required information return even if the attorney keeps part of the payment as legal fees. The specific reporting requirements depend on the facts of the payment.
When do I have to issue Form 1099 to a claimant?
Whether you must issue Form 1099 to a claimant depends on several factors, including whether the settlement is taxable and how the payment is made. Review the reporting examples above and Treasury Regulation Section 1.6045-5 for additional guidance.
What is a taxpayer identification number (TIN), and when do I need it?
If you're required to report payments to an attorney, you should request the attorney's TIN before or when you make the payment. If the attorney doesn't provide a required TIN, backup withholding rules may apply.
What happens if I don't file required Forms 1099?
The IRS may assess a penalty for each required Form 1099 that isn't filed or furnished. Penalty amounts vary and may change over time.
Do I have to file Forms 1099 electronically?
Generally, if you're required to file 10 or more information returns for tax year 2022 and later, you must file them electronically. You can use the free Information Returns Intake System (IRIS).
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