| Dear Alison,
This is clearly an unfortunate situation! The employer is really entitled and obligated to issue you with a 1099-Misc if they paid you compensation in excess of $600. This is the requirement of the IRS. I am truly surprised that they sent you a 1099-Misc very late into the year, however, they may be subject to fines and penalties for late reporting of the 1096 and 1099-Misc reports.
The fact remains that as far as the IRS is concerned you are indeed required to have reported this income no matter whether or not you received a 1099-Misc. Therefore, regardless of receiving or not receiving the 1099-Misc, you as a taxpayer are obligated and required to report this income as either Miscellaneous Other income subject to Self-employment taxes, or reporting this income on Schedule C.
If you have aleady filed your 2006 tax return, I would strongly suggest that you file an amended tax return and report this additional income. Clearly, a CPA would be most useful in assisting you in this effort and he or she may be able to identify expenses that you may be able to offset against this 1099-Misc income and thus possibly lowering your tax liability.
I would definitely consult a local CPA in your area and have him represent you especially if you owe taxes, the CPA may be able to negogiate a payment plan for you too! | 
