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dismissal with prejudice then 1099c issued


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Hello All

Need some help please

From 2008-2010 I battled in court with a law firm for capital one debt for 9,604.00.The debt was not mine and I stated that all through the proceedings.

Finally came trial day.The plaintiff tried to settle with me for 500.Sounds good if the debt was mine,I declined.They had no proof whatsoever that this debt was mine.After 2 years of dealing with this in court and they had no proof,go figure.

When we appeared before the judge on day of trial,the plaintiff motioned for dismissal.I then made a motion for dismissal with prejudice and explained to the judge that the plaintiff dragged this out for 2 years with no proof that this was mine,what I had stated it was not my debt since the beginning.Also brought up the fact that I had case dismissed once before for the plaintiffs failure to appear,which they did multiple times throughout the 2 year ordeal.

The judge granted me the dismissal with prejudice ,the plaintiff take nothing.

This week I received a 1099c from Capital one for the 9,604.00.

Can they do this?

I have read on other threads that if both parties agree upon a dismissal with prejudice that a 1099 c it is possible.

We did not mutually agree for the dismissal.I made the motion to the judge and it was granted.

Is this IRS fraud on capital ones part?

Any help anyone can offer is greatly appreciated

Many thanks

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I don't know the tax laws as well as others on here, but I would wager that Crap1 made a boo boo there. I've heard of some people getting good results with a complaint to their AG's offices when JDBs have pulled this kind of stuff.

What would be funny is to pay the IRS then sue Crap1 to recover what you paid the IRS.

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Unless there is a settlement, not a dismissal, it is illegal for a company to issue a 1099-C. You need to talk to a consumer law attorney and have them either make a call to the Attorney that represented Crap One or file suit against them.

There was no settlement

They first motioned to the judge for a dismissal,I then moved for a motion of dismissal with prejudice and it was granted from the judge.I explained to the judge that all along I stated it was not mine.

Thanks for the advice,really appreciate it

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There is a really old thread around somewhere (I think it might have been from DocDon) where exactly the same thing happened. The bad news is, while the OC didn't convince the civil court judge that the debt was his, the tax court found that it was...he fought for several years, but wound up paying taxes anyway.

You probably are going to need an attorney to help you here...

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I would think that according to the law, the only time a 1099-C can be issued after a dismissal is if the SOL defense was used.

As a previous poster said and the tax court agreed, the IRS does not care. Once they get the 1099-C, it is up to you to prove the debt was not your debt and how do your prove a negative?

I think your attorney has the best advice to go after Crap 1 since it is their mistake which caused the claim and not the US Government. I would suggest going to your attorney that said they would handle it. However, be prepared to pay the IRS whatever tax bracket rate you are currently up to and having to sue Crap 1 and get the money back.

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you are missing the point...the only time a company can issue a 1099-C is when two things happen

1) It is proven it is your debt

2) There is a settlement - anytime there is a settlement for more than $700 less than the debt owed, the creditor has to issue a 1099-C

When there is a dismissal, it is not proven that it is your debt and you are not liable to make payments.

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you are missing the point...the only time a company can issue a 1099-C is when two things happen

1) It is proven it is your debt

2) There is a settlement - anytime there is a settlement for more than $700 less than the debt owed, the creditor has to issue a 1099-C

When there is a dismissal, it is not proven that it is your debt and you are not liable to make payments.

I agree

They did not prove it was mine ,just as I stated all through the preceedings

And we did not settle,or mutually agree for the dismissal.I moved for it.

If others here are saying an oc can do it,how can that be?

Wouldnt paying the taxes on it pretty much say/be admitting the debt is mine?

It was not my debt and the judge agreed with a dismissal with prejudice

Why should I pay taxes on a debt that is not mine

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I'm not a lawyer, so I really can't argue about the legality of the OC issuing a 1099c for a debt on which they sued and had their case dismissed with prejudice.

I can, however, from my own personal experience tell you that the IRS does not care what the civil court says. They will expect the OP to pay the appropriate tax on the "found income" documented by the 1099c...and then prove to their satisfaction that the 1099c was issued in error, and then the OP can apply for a refund.

If I remember correctly, in DiveMedic's case, the civil court dismissed the case with predjudice because the JDB did not have sufficient evidence to prove it was DiveMedic's debt...that's not the same as saying it WASN'T his debt.

The tax court came at it from the IRS's standpoint. They found that he couldn't prove that it wasn't his.

Bottom line...don't ignore the 1099. Get a lawyer NOW before you file this year's taxes and get Crap 1 to correct their error.

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I have to be take WillingtoCope's side on this one. The IRS is not in a position to determine if someone filing an informational return is doing so with fraudulent intent. They simply use the information to determine if someone is being forth coming with their income and expenses.

A civil court cannot stop the IRS either and should not. The idea of civil court is to make whole a person or entity who has been damaged, not to make a person or entity rich. The idea is that if you had to pay damaged because Crap 1 filed a fraudulent 1099, then Crap One should pay you back what you paid in taxes because that is the damage you incurred. That is why I say that civil court is your best action. You can either force Crap One to file an amended 1099 which says the debt is not owed or you can force Crap One to pay the taxes. That is what is for a civil court to decide. Not the tax court.

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