I have the same issue. Paypal has acknowledged that the account upon which the 1099 was issued was a fraudulent account. However, the tax department has yet to issue a corrected 1099 showing that I did not receive any money. Accordingly, I will be filing a lawsuit against Paypal for consumer fraud based upon the fact that Paypal has acknowledged that I did not receive any money, that a fraudulent account has been opened in my name, Paypal issued a 1099 based upon this false information and despite Paypal's actual knowledge of the incorrect information, Paypayl refuses to provide a corrected 1099 which would inform the IRS that the initial 1099 was wrong. Most states have a consumer fraud statute which this claim can be filed under.
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