IRS Tax bill 52 months into chapter 13 for Cancellation of debt

[Manup]

I received a tax bill from the IRS today claiming I owe taxes on a debt that was canceled by Paypal. It shows they sent a 1099-C in December of 2021 which would have been applied to the 2022 return. I never received the 1099-c from Paypal, but it is possible they sent it to the residence I had 5 years ago. So, of course there are plenties and interest applied to the bill.

They were included in the chapter 13 filing but never filed a claim which I thought was odd 52 months ago. I will call my attorney tomorrow, but I was curious if this has happened to anyone else and what the outcome was. I know when the IRS is involved it's going to be a pain

[justbroke]

Contact your favorite tax preparer or CPA. They will tell you about Form 982. Your attorney is going to tell you to see a tax preparer or CPA. Your attorney may or may not mention Form 982. Generally speaking, Form 982 allows you to "reduce tax attributes" of income. For Bankruptcy, it's the first selection on the Form (Title 11).

[jackson123]

Hi,
Same issue this year. I received a 1099-C from PayPal but they did file a claim and are being paid out from the chapter 13.

Manup, I will send you a Private Message

[jackson123]

Please let us know what the lawyer says.

[jackson123]

I’ll PM you back once I get to my 10th post

[Manup]

Lawyer said to respond to form disagreement section and include BK filing paperwork, but to hold off on filing form 982 because that would require an amended return from 2022. He thinks that will take care of it. I guess we shall see.

[justbroke]

Well, see what happens but last time I complained about a rogue 1099, the IRS was emphatic that I had to settle it with the issuer of the 1099. I can't give tax advice, but I'd talk to someone that's an enrolled agent or a seasoned tax preparer (think H&R Block). Maybe they'll answer the question based on their experience.

[Manup]

Update on the tax bill. On April 12th, I received a letter from the IRS stating they needed more time to review the documents that I had sent. A week later I received a letter saying the review had been completed and showed a zero balance. Finally, some good news. Now to make it through the next 5 months.