I think my first suggestion would be too reach out to the organization that paid you the $10k and generated the 1099, and provide them with the information you have about this payment being tax-free. Ask to speak to the person or group who generated the 1099 form, and then discuss with this person why you feel no 1099 should have been generated.

In the best case, they can give you their reasons for generating these 1099s. Or, maybe it didn't occur to them how generating a 1099 impacts the taxes of the recipients, and will issue corrected 1099s showing no taxable income (assuming they agree with your interpretation of the rules) for you and your colleagues.

Assuming you aren't the only person to ever receive this Award, there must be some rationale to why they prepared this 1099. The rules around awards like this one are somewhat confusing, specific, and fluid, and maybe no one at the organization is responsible for keeping current with them.

In my practice, I haven't seen this issue before. The reason might be that people in these loan forgiveness programs are not having any 1099s generated, so there is no form for them to show me when I meet with them for their taxes.

Let us know what you find out.

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