Survey Shows Almost 10% of US Dividend Tax Forms Are Inaccurate

by Leroy Baker, Tax-News.com, New York

08 June 2004

Tax law changes in the 2003 Jobs and Growth Tax Relief Reconciliation Act have contributed to a growing error rate on the dividend tax forms sent to investors by major Wall Street firms this year, a survey has revealed.

The partially completed poll by trade group, the Securities Industry Association, has suggested that information on at least 9.5% of 1099 dividend tax forms is inaccurate, largely as a result of the legal changes which brought about a reduction in tax on qualifying dividends from 38.6% to 15%. Typically, the error rate tends to range between 5% and 8%.

Moreover, the SIA anticipates that when data from March and April are gathered and the study is completed later in the year, the error rate is likely to have grown by a further 2%.

The survey questioned member firms of the SIA, which together represent around 38 million dividend tax form filing clients.

Since anomalies on these forms can often be quite substantial, experts recommend that taxpayers should seek to correct the information, leading to the possibility of higher refunds or taxes due.

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