Disputed 1099-C

[Corduroy Frog]

Client received a 1099-C from a credit card company (also business related) that he feels he never owed the money appearing on the 1099-C.  If he doesn't deal with this, the IRS will expect him to claim the forgiveness as income, and they will not wish to be dragged into a dispute.

Any suggestions??

[BrewOne]

The IRS says to contact the creditor if the 1099-C is incorrect.

"Verify your specific situation with the creditor. Your responsibility to report the correct taxable amount of canceled debt as income on your tax return for the year in which the cancellation occurred remains, regardless of the accuracy of the Form 1099-C you received."

Maybe include an 8275 for your protection if the taxpayer insists they never owed the money?

[Lee B]

Perhaps your client needs to check his credit report for fraudulent activity?

[schirallicpa]

What's crazy about this is the banks can pick any old date to write off things and clean up their balance sheet.  Meanwhile, it's been 3 years since the client made settlement and it was actually written off.  And that's 4 years in real time.  Client doesn't remember.  Maybe he was insolvent then.  Maybe not.  I have had an issue with the bank's  loose-ness (is that a word?)of this ability to report ever since Obama created it.