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Can I fight a neglience penalty for a recent 1099c that was filed on 2011?


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Can I fight a neglience penalty for a recent 1099c that was filed on 2011?

 

Do I pay the tax of $1700.00 on the tax that I owe and hold the negligence penalty money back of around $350 till I file an abatement for this? Will I get taxed on this while they are reviewing my abatement? What is a good abatement reason? Should I pay the $1700 less the $350 negligence penalty? I need some concrete answers here. Please answer my questions directly. I am running out of time to answer this to the IRS. Thank you.

 

I defaulted in 2007 and I never got any notices in the mail from the cc company. I have heard, this is not concrete because everyone I have spoken with has a different answer, that the cc company has 36 months from time of default to report the 1099c. They report in 2011, what does this mean if anything? I cannot prove that they did not send me any notices for debt collection? Is this a losing battle with the IRS? I was never insolvent.

 

Another question. I recenlty settled with a 3rd party deadbeat debt collector recently that bought an old debt that was written off by another cc company. It was around $8,000 in 2007. They stated when they sued me that I owed over $25,000. I settled for around $6000. Will I have to pay taxes on the other $19,000 that they forgave? This is all in interest and again the original debt when sold to this third party debt collector was around $8,000. The interest rate was at around 28%. Thank you in advance for your help. I really appreciate it.

 

 

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OK, first question is "Did you receive a 1099c in 2011"? If you did, then you really have no leg to stand on and I would say pay the penalty and be done with it. If you did not receive a 1099c, then I would argue in the abatement that the supplier of the information did not follow the law and the penalty should be abated. The problem you have is that if you are informed of income, you have to report it, regardless of whether you agree with it or not.

I would say pay the whole thing, including all penalties and interest, and then file for the abatement. That will stop the additional penalty and interest clock from running up the bill even more (The IRS has been known to add interest and penalties on $0.01). If the abatement is approved, then they will issue you a refund. Otherwise, you are just making the bill more if the abatement is not approved.

 

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Hi, Thank for replying......

 

No I never received a 1099 but the OC for this cancellation of debt in 2011. Do you have any examples of abatement letters? Is this a good enough defense for abatement in terms of getting it dismissed by the IRS? I think this might be the best advice I heard yet!! Thank you.

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Of course its written in typical IRS gibberish, but pub 4681 http://www.irs.gov/pub/irs-pdf/p4681.pdf implies to me that you owe taxes in the year in which you receive the 1099c...not the year it was defaulted.

 

IMO, if you received a 1099c in 2012, that is the year for which you owe taxes...there would be no penalty for not paying in 2011.

 

On the other hand, if you have not yet received a 1099c for this debt, you do not yet owe taxes.

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Of course its written in typical IRS gibberish, but pub 4681 http://www.irs.gov/p...s-pdf/p4681.pdf implies to me that you owe taxes in the year in which you receive the 1099c...not the year it was defaulted.

 

I understand that, I defaulted in 2007, I heard that after 36 months, there could no longer be a 1099c filed after that (36 months). I think this is bs and it is not anywhere written in the IRS junkets.

 

IMO, if you received a 1099c in 2012, that is the year for which you owe taxes...there would be no penalty for not paying in 2011.

 

The IRS sent me a letter that demands I answer their request, the cancellation of debt is dated 7/2011 from the OC. I have to respond by March 13, 2013 or I will get more penalties and interest added.

 

On the other hand, if you have not yet received a 1099c for this debt, you do not yet owe taxes.

 

I have never received at 1099c from the OC in 2011. I cannot prove that to the IRS and the want their money. I dont really see any other choice but to pay it and attempt to abate it with the IRS. The IRS doesnt care if I received a 1099c from the OC.


If you know of a way that I can not pay this at all and not have to pay the interest and more penalties while the IRS tries to sort it out of the next few months and you have a step-by-step detailed process, let me know. I dont want to have more interest and penalties added on to this debt. Thank you. BTW, I was not insolvent in 2007 or 2011.

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 I heard that after 36 months, there could no longer be a 1099c filed after that (36 months).

 

No, if the creditor does not attempt to collect for 36 months, that's ine of the "triggers" for issuing a 1099c. 

 

Sounds like they sent the 1099A part to the government and you didn't receive the 1099c part.  There may be a form you can file claiming this, but its unlikelt the IRS will agree,

 

I think you're screwed...

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The issue is unfortunately, you have to try to prove a negative. I would pay the tax and request an abatement and request what the IRS has regarding this issue. I would also file a complaint with the IRS against the OC that claims to have sent the 1099c. That probably will not help you out but will give the OC some problems of their own. You might even get lucky and the OC slips up and admits that they did not send the 1099c.

Also, did you move in that time period. If the answer is yes, then the OC is under no obligation to forward your mail beyond the last known address they have on file. If that is the case, then pay the penalty and chalk it up to stupid tax.

I would get the paperwork anyways because although the federal courts say that one can sue on a debt they have reported to the IRS as forgiven, this actual issue of debt forgiveness and then suing for it has not been determined in the state courts as of yet (one can sue, that does not mean they will win).

Finally, it might behove you to talk to a tax attorney for an hour or 2. I know it is extra money but it might be well spent as they might know something we don't.

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