What is the big deal about 1099s?

In short, 1099s are required by the IRS to double check numbers when people file their tax returns.

When you issue a 1099 to an individual or a company, a copy goes to that person (the recipient), a copy goes to the IRS, and a copy goes to the state. So, if the recipient of a 1099 tries to understate their taxable income by excluding any income from their tax return, the IRS has a way to notice they are doing that.