Is asset acceptance corporation involved in an irs scam?

IS ASSET ACCEPTANCE CORPORATION INVOLVED IN AN IRS SCAM?

Asset Acceptance Corporation (AAC) is not new to this game. As bottom-feeder debt collectors they have tried a lot of tricks and scams to separate consumers from their money, among them; changing dates of last activity on credit reports, manufacturing bogus affidavits for court filings, phony pleadings and even reports of phony payments being made on accounts to change the activity dates.

This latest apparent scam is new, by any definition and may involve staggering amounts of money. AAC is reportedly buying old, mostly worthless portfolios for pennies on the dollar; They then mark them up at inflated figures, then attempt to collect from unsuspecting consumers. The problem with bottom-feeders such as AAC is they NEVER have anything invested in the accounts, other than the money it took to purchase them. They are NOT creditors, have NEVER extended any goods or services, have no liability for accounts and their assertions of being ‘valid' claims, and may be nothing more than smoke and mirrors.

Their latest attempt appears to not only fleece the American consumer but may be an attempt to scam the IRS. It involves sending out IRS Form 1099-C forms to consumers on accounts they failed to collect. The legal questions to be addressed here include how can you claim something you never had, for services you never performed on accounts that never existed on your books? Our emails state that consumers are receiving IRS Form 1099-C, stating the debt is being forgiven by AAC, but reported to the IRS as income. Income? On what? They did nothing, yet appear to be fleecing both the American consumer and the IRS with these forms that may give them huge tax breaks on their income.

Here is what one expert had to say:

Great question. Let's take it to its logical, and theoretical, extreme.

New company (let's say Exxon-Mobil) buys paper, solely for the purpose of tax write-offs. Buys $1 Billion in bad debt for $50,000, which might be possible, if it is really old debt and even discharged debt (though I don't know if it is legal to 1099-C someone after discharge).

Sends out all 1099-C's, does not debt collection at all and applies the $1 Billion to shelter a portion of its $9 Billion windfall, when actually paid only $50,000. I see an audit coming. Think of the accounting entries.

Credit Charge off for Bad Debt $999,950,000 Credit Cash $50,000

IRS regulations allow for a Form 1099-C to be issued on accounts that are uncollected, however where does the smoke and mirrors end and reality start on bottom feeders? If you receive a 1099-C form from AAC, you are urged to consult with a professional tax advisor. By law, AAC must show a zero balance on your credit files and of course, cease all collection activity as that account fails to exist once it has been reported to the IRS. Since AAC can apparently deduct these windfalls off their taxes, it makes me VERY happy for the new federal accounting laws that hold them liable for their accounting practices.

Congress enacted the Sarbanes-Oxley Act, representing the biggest changes ever, to federal securities laws. It resulted from the large corporate financial scandals involving Enron, WorldCom, Global Crossing and Arthur Andersen. Effective in 2004, all publicly-traded companies are required to submit an annual report of the effectiveness of their internal accounting controls to the SEC. AAC is publicly traded under the symbol of: Nasdaq: AACC.

With their recent announcement of record profits, one wonders how far reaching this may go. Is AAC employing ENRON type accounting practices, is what they are doing legal? Anyone receiving an IRS Form 1099-C and thinks it may be bogus is encouraged to file a complaint with the IRS. Perhaps an audit of AAC by the IRS can clarify this new and apparent scam to fleece the IRS as well as the American consumer.