irs letter about 1099c

[spydc]

I received a 1099c from one of the creditors discharged in my BK7. My BK7 was discharged in May 2012. By the time I got the 1099c, I had already completed my taxes for the 2012 year.

Fast forward to today where I got a letter from the IRS claiming that I owe additional money on income based the 1099c. Has anyone had experience responding to the letter? Can I just provide a copy of the discharge order or does the IRS need to see entire petition? Is this something that will trigger some huge full audit.

[LadyInTheRed]

When you got the 1099c, you should have amended your return to attach form 982. I bet there is a phone number on the letter from the IRS. Call that number, tell them the forgiven debt was dicharged in BK and that you didn't receive the 1099C until after you filed your return. Ask if you should file an amended return or if you can just send them a completed 982. If you need to file an amended return, it will be filled out exactly how your original return was filled out, except that you will attach form 982 checking the box saying the debt was discharged in BK.

Please let us know how this goes.

[justbroke]

It is highly likely that you need to file an amended tax return (1040-X) alongside a Form 982 which evidences that the debt was discharged in a Title 11 Bankruptcy proceeding. Fancyspeak for... file an amendment with the Form 982.

As LITR suggested, you can call the IRS and ask them the procedure to amend.