1099 c letter received from Collection agency
Date: Thu, 02/17/2011 - 18:23
received a letter from Capital One/Global Collections today, saying they were going to notify the IRS of my debt. Notification is one thing, but it doesn't say what can happen after that? I've never had a collector mail me this before about the IRS? Does anyone know if it's just a scare tactic? or what?
Your debt has been forgiven by capital One/Global Collections. A
Your debt has been forgiven by capital One/Global Collections. As a result of that you have received a 1099c form. You will be liable for paying taxes for this forgiven debt to the IRS.
Quote:As a result of that you have received a 1099c form. You wi
Quote:
As a result of that you have received a 1099c form. You will be liable for paying taxes for this forgiven debt to the IRS. |
With all due respect to Anna, the above statement is not correct.
First, a threat to send you a 1099 is just that, a threat in an attempt to collect the debt. Second, depending upon your financial situation you might be better off with the issuing of the 1099 as, once that is done, the threat of collection ends as the debt was forgiven.
Whether or not you will owe taxes on the amount forgiven depends upon your solvency. If you were insolvent when the debt was forgiven or have discharged the debt in bk, there is no tax consequence, period. See the following:
http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000108----000-.html
http://www.irs.gov/pub/irs-pdf/f982.pdf
Des.