Received 1099-C for Discharged Debt

[justbroke]

I disagree. With this error it's better to solve it at the source. While I agree with HHM that it is likely no big deal why would you file information with the IRS that you honestly thought was wrong. If he shouldn't have gotten a 1099 then he shouldn't get one, period.

I completely disagree, having been there.

There's a difference between a 1099-Misc issued outside of insolvency or anything else, and a 1099-C issued as a result of a Bankruptcy. The IRS provides a much much easier mechanism for informing the IRS that the debt was discharged in an action under Title 11.

As your own case shows, these have a nasty habit of biting you in the behind. It's far better in the long run to correct the mistake at the source: with the creditor.

Not quite that simple.

The IRS told me my only recourse was to have the source correct it. This is because there is no mechanism to correct a 1099-MISC issued outside a Title 11 action. It took 2 years to motivate the issuer to send in a corrected 1099. The problem was just corrected this year (in summer of 2009). The tax was assessed in 2007... from a 1099 related to tax year 2005.

So, while I was piling on penalties and the IRS was threatening to levy against my home and other property, you believe that it was easier to deal with at the source? Do you know how many times I was promised it was corrected? Do you know that each time they "said" they sent in the correction to the IRS, the IRS told me to wait 45-90 days. Only to find that the issuer didn't send in a correction.

As someone who has had a similar problem, the IRS provides a mechanism if you were insolvent and especially if you had filed under Title 11 and this was caused by that... you just fill out form 982. I **wish** I could have filled out that form. That would have been the first thing that I did.

From my own experience, the person who issued my 1099 had absolutely no incentive to correct it, and it took them 2 years and many many phone calls to do so.

As such, there are absolutely no guarantees that the lender/bank/creditor/whoever will fix it. My persistence paid off after 2 years... but I was almost levied by the IRS for it! Don't let that happen to you. File a Form 982 and be done!

[Widdle]

I completely disagree, having been there.

There's a difference between a 1099-Misc issued outside of insolvency or anything else, and a 1099-C issued as a result of a Bankruptcy. The IRS provides a much much easier mechanism for informing the IRS that the debt was discharged in an action under Title 11.

Not quite that simple.

The IRS told me my only recourse was to have the source correct it. This is because there is no mechanism to correct a 1099-MISC issued outside a Title 11 action. It took 2 years to motivate the issuer to send in a corrected 1099. The problem was just corrected this year (in summer of 2009). The tax was assessed in 2007... from a 1099 related to tax year 2005.

So, while I was piling on penalties and the IRS was threatening to levy against my home and other property, you believe that it was easier to deal with at the source? Do you know how many times I was promised it was corrected? Do you know that each time they "said" they sent in the correction to the IRS, the IRS told me to wait 45-90 days. Only to find that the issuer didn't send in a correction.

As someone who has had a similar problem, the IRS provides a mechanism if you were insolvent and especially if you had filed under Title 11 and this was caused by that... you just fill out form 982. I **wish** I could have filled out that form. That would have been the first thing that I did.

From my own experience, the person who issued my 1099 had absolutely no incentive to correct it, and it took them 2 years and many many phone calls to do so.

As such, there are absolutely no guarantees that the lender/bank/creditor/whoever will fix it. My persistence paid off after 2 years... but I was almost levied by the IRS for it! Don't let that happen to you. File a Form 982 and be done!

And, since we mainly deal with IRS computers, they only see the 1099-C as income to you......without any offset (Form 982), which WILL seem as income because you are not letting the "computer" know otherwise.

They don't have the manpower to research your case and see that you filed BK and the research the BK to see that you included the 1099-c debt.

One other thing, they will "figure" your "corrected" taxes, including this "alleged unreported income" on their own and send you a nice bill, as well as hold your "future refunds".

And, just when you think everything is resolved because you haven't heard from the IRS in 5 or 6 months.....You get another letter in the mail for the same request.

They do not normally send letters each and every month.

So please save yourself the future hassle......amend and be done with it.

[justbroke]

And, just when you think everything is resolved because you haven't heard from the IRS in 5 or 6 months.....You get another letter in the mail for the same request.

Exactly what happened to me! Took a total of 3 years to be corrected.

[Dst1]

HHM and Justbroke.

And since when was "Just easier" = WISE.

Since never, that's when.

I'm not saying your approach is wrong. I'm just inherently more conservative. Because as I said, my experience is that the easy way tends to come and bite one in the butt.

[justbroke]

And since when was "Just easier" = WISE.

I guess you don't understand the whole IRS Form 982 thing then. It has nothing to do with being easier or wise. It perfectly within the law and the check box is obviously there, on Form 982, for a reason! (Otherwise, you wouldn't be reporting it, if you didn't get a 1099-C!)

So, instead, you are advocating waiting 3 years, as I did, with threats of garnishment and levy... over just filing Form 982 and being done with it?

Perhaps I should replace the word "easier" with "only way". The only way to effectively deal with a 1099-C issued due to discharged debt... is to file IRS Form 982.

I'm not saying your approach is wrong. I'm just inherently more conservative. Because as I said, my experience is that the easy way tends to come and bite one in the butt.

You did say my approach was wrong. The conservative method is to file the IRS Form 982 to inform the IRS is was discharged under Title 11. The liberal or more ineffective and haphazard way, is to beg the issuer to recant.

[aces67]

Sounds like a clerical error to me. You should be getting a 1099 on a debt that was included in BK.

[HHM]

HHM and Justbroke.

And since when was "Just easier" = WISE.

Since never, that's when.

I'm not saying your approach is wrong. I'm just inherently more conservative. Because as I said, my experience is that the easy way tends to come and bite one in the butt.

Not sure why the pissing contest. The IRS is actually much easier to deal with in this issue than the original lender. The IRS code has the provisions to deal with this and the forms to do it. Why waste time trying to get an original lender with no incentive to help when all you got to do is, spend less than 5 minutes, download a form, print your name, check a box, and send in a form; and your DONE. Problem solved.

The goal is to solve the problem, not right a wrong. If you accidentally get issued a 1099, you file out the 982, and send it in, that solves the problem.