… based on a recent review of your account, we may not have provided you with the level of service you deserve, and are providing you with this check.”
QUESTION: Do you have taxable income?
(1) First, if you deducted the $12,789 as mortgage interest, the recovery of a previous interest deduction can be taxable.
(2) Second, how would you know without further detail from the mortgage company?
(3) Third, is their reporting on a Form 1099 fatal?
Hey, you received a 1099. Two, in fact. A 1099 means income. If the 1099 is wrong, contact the mortgage company and have them void the 1099. Until then, as far as we are concerned you have income.
We hold that petitioner presented credible evidence that the $12,789 was a reimbursement for a mistake that [...] had made on his accounts. This return of $12,789 of petitioner’s mortgage payments was not a taxable event and the amount is therefore not includible in income.”