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Independent contractors are increasingly doing business for customers in multiple states. This trend has been
enabled by Internet communications and document transmission technology.
Businesses making payments to unincorporated entities (sole proprietors, partnerships, and limited liability
companies) are required to issue 1099s for payments of $600 or more in a calendar year.
Starting with 2004, the IRS is exchanging 1099 information with the states.
The states are starting to cross check 1099s from businesses against income tax filings, and are issuing tax
assessment notices if the income cannot be traced to a return.
The states have rights under the Treasury Offset Program to claim a federal tax refund to meet an unpaid state