Here is a doozy of a question
Date: Mon, 09/24/2007 - 06:55
Ok, a company may take a unpaid account and charge it off as bad debt, which allows them to include that ammount at the end of the year with their tax filings.
They then in turn are granted that ammount as part of a tax refund/credit. Any business owner with at least half a brain probably knows this, and I'm sure some of you know this as well. So here is the question, if a business files a bad debt as a loss, gaining the tax credit at the end of the year, are they still allowed to attempt to collect? Or would that become a issue of defrauding the consumer by attempting to collect a debt that has in fact been paid for, and defrauding the IRS by seeking the same money that they got the tax credit for? Think about it...
Regards
JCEMT
Wow what a good question! I hope you get an answer, I would lov
Wow what a good question! I hope you get an answer, I would love to know as well! I didn't even know about that, it brings up many issues...also, if a company did this, can they SELL the debt to a junk debt buyer or a CA? Seems to me they wouldn't be able to sell it off either...
You know what?
You know what? I think I'm just going to contact the IRS with this question, they are a government entity that is here to serve the people, and they should have very reliable knowledge in relation to this question.
Well...
It turns out that I misunderstood, it is not taken as a tax credit but written off as a business expense (as if they had paid those monies to the debtor) and it reduces their taxable assets accordingly. Thus no credit is recieved, just a tax reduction, allowing the business to still attempt to collect on the debt.
Well, I guess that answers that question.
That was a great question! In fact this happened to me. I defaul
That was a great question! In fact this happened to me. I defaulted on a GE loan and they charged it to my 2005 taxes. In fact, I just got the notification last Friday that I now owe $500 more to the IRS for that year. It never stops, does it?
Also, they can sell it to a junk debt buyer after it is charged
Also, they can sell it to a junk debt buyer after it is charged off. Just because it is charged off doesn't mean the debt is still not owed.
I had a debt charged off while I was still making payments-23 years later :shock: A junk debt buyer got it and you can take it from there!
I also went back and paid off an account on a credit card that was charged off- they had not sold it yet...Karen
