bradford0

CA filed 1099-C

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Residence-Michigan

In Oct 03, CA (Arrow) mailed collection letter including an account #. Alleged debt was from 1994. I responded with DV, plus advised it was beyond SOL. In April 04, heard from same CA, different account#, different amount. Responded identically. Heard nothing whatsoever since until today when I received 1099-C from Arrow, with an account # different from the two earlier ones and a different amount. I sincerely have no knowledge of this alleged debt. I am asking if Arrow has violated FDCPA and recommendations for remedy.

Thanks much!

ps I kept copies of Arrow's earlier letters plus copies of my responses and of course the all important SIGNED green cards from Arrow.

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What are they listing as the 'cancellation date' on the 1099-C ??

Who was the original creditor ?

This is the 2nd or 3rd I've heard of CA's issuing 1099-C's for dead debts. I'm wondering if they are misinterpreting the new IRS rules on 1099-C's for out of statute debts.

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Creditor (Arrow) listed cancellation date as 12/31/05. I have no idea who the original creditor was and the 1099 does not indicate any creditor other than Arrow Financial. I have records back to 1994, and no credit card account number matches the one they refer to on the 1099. The letters Arrow wrote to me in 2003/2004 referred to small balances with First Card and Citibank, DOLA 1994. The account numbers referred to in their letters do not resemble the one used on the 1099, so I truly do not know what they are referring to. If there are no legal remedies, perhaps I should ask IRS to check it out???

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I'm not certain where I read this - I'll see if I can find the link somewhere.

I've read where CA's & JDB are sending out phony 1099-c's in an attempt to get the debtor to pay.

I'll see if I can find that link.

My mistake. It was over on AOC where the CA's & JDB are threatening to send 1099-c's to debtors in an attempt to make them pay.

http://www.artofcredit.com/board/showthread.php?t=26248&highlight=1099

Although this link has some great info for 1099's

http://www.artofcredit.com/board/showthread.php?t=29838&highlight=1099

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Thanks for the info MissaFraq: It sounds like a lot of disagreement about interpreting the rules. One poster sounds definite one way, another sounds definite 180 degrees the other. Since I have copies of prior correspondence with this CA, including signed postal receipts where I demanded validation on this now 12 year old alleged debt, which they never attempted, I believe I will take this 1099-C to the IRS office to protest and perhaps initiate problems for this CA. Since the CA never attempted validation, how can they now come up with some "self determined" amount including a completely eroneous account number.

Thanks again!!

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Just so you know:

I had a CA coma after me, and could not validate

I sued

We settled out of court. I got cash and a delete. This was in Nov 2003

Three months later, I got a 1099c

I fought it for 2 years. The IRS told me that it must be my loan, or else the CA would not have had my SSN. They refused to accept that the debt was not valid as a reason to ignore the 1099. They told me it was a "frivolous" argument.

I lost in tax court in Oct of 2005.

I paid $2,500 in taxes, penalties and interest.

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No matter which way the OP goes, I would definately involve the IRS on this. Explain your situation and ask them what you should do. Make sure you get their full name, ID number, etc to cya if you are ever audited.

I would err on the side of caution mostly because I fear the taxman :wink:

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How can a Collection Agency give you a 1099C? Even if it was Legal for Credit Card Companies to issue you a 1099C how can a Collection agency do so? Did they forgive your debt? Or did I read it wrong?

In any case talk to a good lawyer, or disregard the 1099C and wait to hear from the IRS which you might not. I would have so much fun with an audit in that case.

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If my gibberish to english translator is working, the IRS does seem to say that the original amount borrowed should be reported separately from any interest or penalties, and that each "owner" of the debt should only report on the portion they own.

So in effect, you would only owe taxes on the amount that was legitmately "income" to you orginally.

But...I'm not sure...

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Maybe one way to deal with inaccurate data on a 1099c would be to turn the person that sent it into the IRS for fraud. If you have a court decesion that says the debt wasn't yours and the CA knew that was the case, but sent you a 1099c anyway, that's fraud. It may not get your money back (unless the IRS does agree and gives you the finder's fee) but it would certainly hassle the CA.

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Forgive me for being bitter, but I went through a long dispute on this. It is not in the best interests of the IRS to admit that the debt is inaccurate. The IRS wants to get paid, and the way to do that is to believe the 1099's

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Understood...and I agree. The IRS just wants paid. That's why reporting someone for fraud is so much fun. The IRS will audit them and, if they don't find your accusations accurate, they're still likely to find something.

Just in case...

http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html

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Im no expert by any means so please don't let me cloud your judgement. But just where in the IRS Code does it define "Income"?

Common sense would suggest that even if the JDB was able to give you a 1099C he would have to report what he actually paid for the debt as a write off or forgiven debt. How can he wright off more than he paid for the debt?

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Yeah, see that's what I'm suggesting. There's two sides to the 1099c story.

1. You as the debtor have to claim it as "income" and pay taxes on it.

2. The creditor (OC or JDB) gets to claim that amount reported as "loss" which is deducted from their income before that figure their taxes.

So, I'm saying...if someone sends you a 1099c for a debt that was not yours or for money that you didn't actually borrow from them, it would seem only fair that you turn them in to the IRS for claiming a loss to which they were not entitled. At the very least they'll have the pleasure of being audited.

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As Willingtocope sez, this is a law taking effect this year. The IRS has issued

some guidlines-----but these will have to be fleshed out in courts.

Until then no one is quite sure------but then again the FDCPA came out over a

quarter of a century ago and no one is sure yet either.

But on the collector boards, equal confusion reigns. But many are taking delight---another club to use against consumers to force contested debt

into more probable payment.

But it takes no crystal ball to see there will be alot of abuse here----and another way to fight it may be to expose the IRS the legal liability if they unfairly side with the collector-----the IRS reputation is low enough already without more bad PR.------I see this new law as a huge danger to the IRS because the CA's will shamelessly use them---until the IRS wises up when courts start dumping on them. And pretty soon we make get some court rulings that the IRS must spend precious manpower investigating the dispute when consumers contests a 1099-c. ---with some

due diligence required later reviewable by a court,

But its a time bomb for the collector also----now they somewhat must issue a 1099-c.--where it was optional before. When they had no grounds to collect---and issue the 1099-c they must when they give up----it comes back on them on uncollectable in the first place with the proper court rulings that may well follow.

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Dive Medic is right.. if its on the 1099C.. its pretty much set in stone unless you want to waste YEARS and I do mean YEARS telling the IRS it is wrong.. I too had two 1099C's from creditors.. they past the law last year.. you have to claim it as income... seems unfair i agree.. but that is the new law...

I talked to my accountant and tax laywer about this... honestly its not worth fighting.. it will cost you more in the long run

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That is my point, the IRS told me that the only appeal allowed was to appear in court in Washington, DC and that pro-se was not allowed in that court, so I would need an attorney. The tax was only $2500. An attorney, a plane ticket, rental car and hotel would be almost that much, if not more, and no guarantee of a win.

Welcome to the new IRS strategy and the (elephant) controlled congress.

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I agree that Dive and others are getting hosed on the sort of guilty untill proved innocent thing in IRS rules. But tax rules new in 05 will really put the IRS in bed with junk debt buyers. Its also my guess that enough consumers, perhaps in the class action process, will climb that high hill to the court house

and the IRS will quickly discover exactly how flakey the junk debt buyers are. As the IRS loses case after case.

I think the junk debt buyers are reading the same tea leaves as they are petitioning for an exemtion from these IRS rules.--see post in debtorboards in the junk debt section.

The big loser in the tax year 05 1099-c regulations may end up being the junk debt buyers---------who will end up being asked---if you don't have enough to document a 1099-c why are you trying to collect in the first place?

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If my gibberish to english translator is working, the IRS does seem to say that the original amount borrowed should be reported separately from any interest or penalties, and that each "owner" of the debt should only report on the portion they own.

So in effect, you would only owe taxes on the amount that was legitmately "income" to you orginally.

But...I'm not sure...

My question is, if a 1099c is issued, the amount of the forgiven debt will not include the interest that has accrued over the years. The amount forgiven, would only be the amount owed, on the date of the last payment?

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