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Creditor sent 1099 to Internal Revenue Service

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In August 2012 thanks to the help of this site I won a case against a debt Collector, I went unde the name of Barney.I did not use Barney as I could not remember my password.  Before I found this great site .  I was sued by Portfollio Recovery Associates, I hired an Attorney who convinced me to settle. I settled leaving a balance of 9,000.00 (2011). Today I get a letter from The Internal Revenue Service for payment of back taxes for that year in the amount of 2,500.00. Has anyone tried to fight this process. I cant believe I took that Attorneys advice.

The amount that was forgiven was $9,000.00 but it included several thousand dollars in late fees, interest and attorney fees, that I do not think should have charged as income.

People beware before you settle, It pays to fight. They will send a 1099 to the Internal Revenue Service.



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  • 3 months later...

The Form 1099-C instructions identify who must issue the form.

The list includes financial institutions, credit unions, and organizations whose significant trade or business is the lending of money.

 I don't think Portfolio Recovery Associates lends any money.

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Don't even mess with trying to get anywhere with inquiries to the IRS or "tax professionals" unless you know you can meet the IRS' requirements to qualify as insolvent.


Instead send a letter to your state's Attorney General's office.  If there is any possibility of relief due to wrong-doing by Portfolio Recovery then they will handle it and you could quite likely receive a cancelled 1099c from Portfolio in the mail. 


There is an old thread somewhere on this forum regarding Portfolio sending someone a 1099c and they finally got it disposed of because when the Attorney General contacted Portfolio of course they could not show any proof of owning the debt. 

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If Portfolio purchased the debt they can probably get away with issuing the 1099c.

I agree with the advice to analyze your insolvency status and you can probably claim that to reach a zero balance owed.

I can't just walk into DMV and tell them I bought X car and now need it regestered to me with no legal documentation.

Just cus they bought it doesn't mean they can prove they own it.

However the IRS may view settling the debt for less than owed as proof of ownership. Who knows when it comes to this gov.

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