Last month, I received a 1099-K from PayPal for a transaction that I received from my friend. My friend was new to using Venmo and he didn't realize that he tagged the transaction as a purchase for a good or service when it was actually a friend-to-friend payment. I alerted him to that on the day of the transaction and he contacted Venmo immediately thereafter. This was back in August. However, I received a 1099-K from PayPal last month confirming that the payment that my friend sent me was, indeed, considered a purchase for a good or service. I called Venmo earlier today; they said that their records showed that my friend called and that the transaction was, indeed, not a purchase for a good or service. However, they would not correct the 1099-K and said I would need to consult with a tax official and obtain a waiver in order not to pay any taxes on the transaction as listed on the 1099-K. I spoke with a tax expert immediately thereafter and he said there was no way he could obtain a waiver, and that PayPal would need to make the correction themselves. How have you handled something like this, especially since the erroneous transaction was already reported to the IRS? What's strange is that PayPal had the correct information in their records (after my friend called to state that it was actually a friend-to-friend transaction), but yet, they still sent the 1099-K and reported the transaction to the IRS.
