You should look into the taxpayers bill of rights passed in 1996.  One of 
the provisions allows you to sue anyone who files a fraudulent report of 
earning.  Sounds like you would have a case.

Also, a lot of the burden of proof in cases like this has shifted from the 
taxpayer to the IRS.

At 08:35 AM 3/5/02, you wrote:
>Oh dear... I know how much fun the IRS is to deal with on these matters.
>
>My battles with them over my 2000 tax returns continue to this day.
>
>A client claimed to have paid me a large sum ($5k) in cash for a database I
>worked on, when in fact they did not pay me a dime and their business went
>kaput. Since the company is no longer around, the books are not accessible
>and neither is the actual database. You would think this would be easy to
>resolve, but, here we are two years later and I am still fighting the man.
>
>What has not helped matters is that the case keeps getting assigned to new
>auditors, now I am 'working' with some guy from Kentucky who has no interest
>in getting this off his books. And he is never at work.
>
>Grrrr.....
>
>Mike
>
>-----Original Message-----
>From: Raymond Camden [mailto:[EMAIL PROTECTED]]
>Sent: Monday, March 04, 2002 4:40 PM
>To: CF-Community
>Subject: Ack, IRS out to get me...
>
>
>So, guess what happened to me today? It appears as if an ad broker I
>used on Death Clock back in 2000 sent the IRS a little mistake. They
>told me they paid me X,000. The form they sent me at the end of the year
>confirmed it. But they reported to the IRS that they paid me X*10.
>
>Ack.
>
>Has this happened to any one here? I assume it's going to be easy to
>clear up. We had professionals handle the year 2k taxes.
>
>-rc
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