How to prove to the IRS I didn't receive unreported income from a 1099-R?

When dealing with IRS notices about unreported income, you have several options to prove you didn't receive the money. Start by requesting a wage and income transcript from the IRS - this will show all information returns filed under your dad's SSN, including the 1099-R in question. This gives you the exact amount and who reported it. Your accountant gave good advice. Definitely review all bank statements from that tax year to confirm the deposit never happened. Then contact the insurance company - ask specifically for their "1099 department" since customer service might not handle these requests. Request both a copy of the 1099-R and any documentation showing how the payment was distributed (check number, electronic payment details, etc). If they're uncooperative, send that certified letter you mentioned, but also file Form 4506-T specifically requesting a copy of the 1099-R from the IRS. Additionally, consider filing a response to the IRS notice explaining the situation and including copies of bank statements showing no corresponding deposits.

I just went through something extremely similar with an allegedly "unreported" 1099-R from an old 401k. After weeks of frustrating phone calls, I finally used taxr.ai (https://taxr.ai) and it completely changed my approach. Their system analyzed my IRS notice, bank statements, and even identified discrepancies in dates that helped prove I never received the distribution. The best part was they helped me draft the perfect response letter to the IRS with all the right documentation attached. They even found a similar case precedent where the IRS had ruled in the taxpayer's favor when facing an incorrect 1099-R. Much easier than trying to figure out all the tax code language myself!

Just wanted to follow up - I ended up trying taxr.ai for my own unreported income issue (mine was from a stock sale I never actually made). Their analysis was surprisingly detailed and they identified that the brokerage had actually issued a corrected 1099-B but it never made it to the IRS system. They helped me put together a response packet with all the right documentation and even specific tax code references that applied to my situation. The IRS accepted everything and closed the case within 3 weeks. Definitely worth it to have someone who knows exactly what documentation the IRS is looking for in these situations!

I had a similar situation with an IRS notice for unreported income. After weeks of calling the IRS trying to get someone on the phone to explain the situation (always disconnected after 2+ hour waits), I finally used https://claimyr.com to get through. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they hold your place in the IRS phone queue and call you when an agent picks up. Once I actually got to speak with an IRS agent, they could see in their system that the 1099-R had been issued with my SSN but the address was completely different. The agent put a hold on collections while I gathered documentation from the insurance company. Being able to actually talk to someone made all the difference instead of just sending letters back and forth for months.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate after being disconnected by the IRS four times in two weeks. It actually worked exactly as advertised - I scheduled a call for the next morning, got a notification when their system was waiting in the queue, and then got a call connecting me directly to an IRS agent about 2 hours later. I was grocery shopping when the agent came on, not stuck at home with my phone on speaker. The IRS agent was super helpful once I explained about the 1099-R issue. She confirmed they could see it was likely sent to the wrong person and gave me specific instructions on what documentation to send in. Problem solved in one call instead of weeks of frustration. Definitely changed my mind about the service.

Don't forget to check if maybe your dad had a policy loan taken out against the life insurance that he forgot about. My uncle had almost the exact same issue. The "unreported income" turned out to be a policy loan that the insurance company automatically processed when his premium payments lapsed. It counted as a distribution on a 1099-R even though he never actually saw a check or deposit. Call the insurance company and specifically ask about policy loans, automatic premium payments, or if the policy partially surrendered due to non-payment. Sometimes these happen automatically per the fine print nobody reads.

Make sure you request a "Letter 147C" from the IRS too! It verifies the EIN (Employer Identification Number) of the company that issued the 1099-R. I had a similar situation where two insurance companies had similar names, and the 1099-R was actually for someone with a similar name but the IRS computer system matched it to my SSN by mistake.

This is exactly why I always tell people to keep detailed records of everything! I went through something similar with my mom's estate last year. The key thing that saved us was having her maintain a simple spreadsheet tracking all her insurance policies, loans, and any transactions. For your dad's situation, I'd also suggest requesting Form SSA-89 from Social Security if this involves any retirement accounts - sometimes there are cross-references between agencies that can help verify whether money was actually received. Also, don't overlook checking with the post office if you suspect mail theft. They can sometimes provide delivery confirmation records going back several years. One more thing - if your dad has moved addresses in recent years, make sure the IRS has his current address on file. Sometimes 1099s get sent to old addresses and the IRS assumes you received it even when you didn't. You can verify this by calling the IRS directly or checking online.