Issued a 1099C for 2011 on a 2007 discharged debt??

[biotechsolution]

How would you treat this? Would it be considered a violation of the permenent injunction? Not that I'm really interested in pursuing that option. But I see this could be a headache with filing this year because the debt is 4 years old and the IRS could ask why was the 1099C issued 4 years later.

It was a business line of credit discharged in my non-consumer 7, 240K. That could have some tax implications if not corrected.

[tobee43]

don't be concerned about it, just give it to your accountant and they will attach a 982. these cc companies do it years later, like it matters or something. it doesn't you have NO tax liability.

[biotechsolution]

but I've heard different opinions regarding if it's a violation. 4 years later just is annoying.......

[tobee43]

http://www.bkforum.com/showthread.php?71506-The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation

that can explain it for you

so it really is not a violation of the stay ...

[biotechsolution]

If the 1099 was issued years after the debt was discharged in bk why wouldn't it be a violation? The debt was never forgiven, it was discharged. So why would a creditor issued a 1099 4 years after the debt was discharged.

[tobee43]

If the 1099 was issued years after the debt was discharged in bk why wouldn't it be a violation? The debt was never forgiven, it was discharged. So why would a creditor issued a 1099 4 years after the debt was discharged.

they are actually allowed to send it at any given time which should make no sense, however, they are allowed. sometimes people have to file an amended return for that year because, seriously, they are allowed to get away with about anything. although, once again, you have no tax liability, just a bit of a hassle. that's it.

[AngelinaCatHub]

I would also think/add that the Statute of Limitations, would apply here. What say you Tobee? 'Hub

[justbroke]

If the 1099 was issued years after the debt was discharged in bk why wouldn't it be a violation? The debt was never forgiven, it was discharged. So why would a creditor issued a 1099 4 years after the debt was discharged.

This is absolutely not a violation of the permanent discharge injunction. It has absolutely nothing to do with the continuance or start of process to collect a debt. It is a legal requirement -- federal -- that creditors much account for "forgiven" debt.

The 1099-A/C is required for accounting and tax reporting purposes. The fact that it was 4 years later, only means that the creditor has completely written it off as non-collectible and have "forgiven" the debt.

[biotechsolution]

This is absolutely not a violation of the permanent discharge injunction. It has absolutely nothing to do with the continuance or start of process to collect a debt. It is a legal requirement -- federal -- that creditors much account for "forgiven" debt.

The 1099-A/C is required for accounting and tax reporting purposes. The fact that it was 4 years later, only means that the creditor has completely written it off as non-collectible and have "forgiven" the debt.

In the IRS guidelines for issuing 1099C it clearly states that a 1099C should not be issued if a debt was discharged in bankruptcy.

[btbeme]

IRS Form 982 is your friend. It is a PITA that you have to even be concerned about this, but the IRS solution is the easiest and fastest answer.

EDIT: Sorry Tobee - I just saw your answer above. Didn't mean to pile on...

[tobee43]

I would also think/add that the Statute of Limitations, would apply here. What say you Tobee? 'Hub

LOL!!! hub you are too funny!

statute of limitations for tax refunds, IRS audits, and collections are 3 years to claim a refund, 3 years to be audited, and 10 years to pay tax debts, so as jb points out it really is only an indicaton from the creditor that they have as jb says forgiven the debt.

[justbroke]

In the IRS guidelines for issuing 1099C it clearly states that a 1099C should not be issued if a debt was discharged in bankruptcy.

Where does it "clearly" state that it should not be issued? It's not illegal, contempt nor a violation of the automatic stay to issue a 1099-C on a discharged debt.

In fact, the instructions on Form 1099-C actually reads "[y]ou are not required to report on Form 1099-C the following... [c]ertain bankruptcies. You are not required to report a debt discharged in bankruptcy unless you know from information included in your books and records that the debt was incurred for business or investment purposes. If you are required to report a business or investment debt discharged in bankruptcy, report it for the later of..." The IRS also has "codes" for 1099-C's that are specifically for debts discharged in a bankruptcy.

To me that clearly means that it is an entirely voluntary reporting by the creditor. In no way is this a violation of the permanent discharge injunction.

IRS Instructions for Form 1099-A/C - 2012

[tobee43]

IRS Form 982 is your friend. It is a PITA that you have to even be concerned about this, but the IRS solution is the easiest and fastest answer.

EDIT: Sorry Tobee - I just saw your answer above. Didn't mean to pile on...

no problem! piling is good

as justbroke has reiterated, it's not a violation.

[HHM]

Justbroke already pointed out, IRS instructions merely state a 1099-C is not required, that DOES NOT mean the are forbidden from issuing.

If you keep reading the instructions, it does state that a 1099-C is "required" if the creditor has made no attempt to collect the debt for 36 consecutive months. That is probably why you are receiving the 1099-C.

There is no violation of any law. Simply fill out form 982, check the box that says, debt was included in a case filed under Title 11..., and that's it.

And to answer the follow-up question, the form 982 would be for this years taxes (2011), you would not amend your 2007.