Notice of Intention to File 1099-C Form - Scam?

[gryndor]

California

I received a letter today saying that I owe an ancient bill from a check cashing store. I have been offered two payoff options or "if no settlement is agreeable please file the form below (a 1099-C) with your 2020 taxes," saying that the IRS will add this charge off to my total taxable income.

The letter, if it matters, is from the Offices of Taylor and Associates of Colton, CA - google search says this is a predatory scam.

So do I:

1. Ignore this and toss into the trash
2. Send a cease and desist letter in some fashion
3. Ask them to validate this debt
4. Declare that this is a time-barred debt even if it WERE mine, and they should pound sand

Thank you!

 

[PayrollHRGuy]

1. This won't stop them from filing their copy of the 1099 with the IRS.
2. I don't see how that will help.
3. Sure.
4. Maybe but even if it is time-barred that won't affect the 1099 status and the fact that you will owe taxes on the discharged amount.

 

[gryndor]

My problem is that I have never ever used a check cashing service, so I don't know what this could even be from. I don't believe it's a debt that I owe. Can they really just issue tax forms to biff up my taxes without any kind of proof or connection to reality... or is this a fake, made-up form to scare me into sending them money?

Is there a way to check to see if forms like these have been filed?
It also looks like there's a Form 4598 that might answer this 1099-C to assert it was filed in error. Is that relevant?

 

[adjusterjack]

It also looks like there's a Form 4598 that might answer this 1099-C to assert it was filed in error. Is that relevant?

Yes, the following article provides the procedure. Follow it.

https://getoutofdebt.org/43711/how-to-deal-with-a-new-1099-c-issued-on-old-debt-using-little-known-irs-form-4598

 

[Taxing Matters]

So do I:

1. Ignore this and toss into the trash
2. Send a cease and desist letter in some fashion
3. Ask them to validate this debt
4. Declare that this is a time-barred debt even if it WERE mine, and they should pound sand

Thank you!

If the debt is time barred then I'd simply ignore it as there is nothing the creditor can do to successfully collect it and engaging in discussions with the collector would not benefit you in any way. If the collector or creditor sends you a Form 1099-C for the debt, you deal with that when you file your 2020 return. Note that by sending you the Form 1099-C the creditor is asserting the debt is discharged (forgiven/canceled) which then would make collecting that debt in the future more difficult even if the SOL wasn't expired. The general rule is that discharged debt is income in the year that the debt is discharged. But there are some exceptions to that which may allow you to exclude some or all of the debt from income. See IRS publication 4681. Even if you have to include the discharged debt as income that's still cheaper than paying the debt itself.

My problem is that I have never ever used a check cashing service, so I don't know what this could even be from. I don't believe it's a debt that I owe. Can they really just issue tax forms to biff up my taxes without any kind of proof or connection to reality... or is this a fake, made-up form to scare me into sending them money?

If the debt was never owed in the first place then there is no income from discharge of debt. You'd then tell the IRS that when it sends you an inquiry as to why the alleged discharged debt was not reported on you return.

It also looks like there's a Form 4598 that might answer this 1099-C to assert it was filed in error. Is that relevant?

There is no IRS Form 4598 currently listed on the IRS web site. After seeing Jack's link, it might be an internal form the IRS generates, but it is not something you can fill out yourself. The article he posted, however, is itself 8 years old, and notes that the form was last referenced by the IRS 13 years years ago.

 

[PayrollHRGuy]

My problem is that I have never ever used a check cashing service, so I don't know what this could even be from. I don't believe it's a debt that I owe.

It might have been nice if you had mentioned that to begin with.

 

[gryndor]

If the debt was never owed in the first place then there is no income from discharge of debt. You'd then tell the IRS that when it sends you an inquiry as to why the alleged discharged debt was not reported on you return.

Ok, so I'm glad to see there would be an inquiry process where I would get to explain the situation as I know it. It's not "file this form you don't really understand now or else you're toast" type of situation...

Thank you all <3

 

[gryndor]

It might have been nice if you had mentioned that to begin with.

Boo, I meant to and got caught up in the rest of my typing. My apologies.

 

[zddoodah]

I received a letter today saying that I owe an ancient bill from a check cashing store.

Define "ancient."

So do I:

1. Ignore this and toss into the trash
2. Send a cease and desist letter in some fashion
3. Ask them to validate this debt
4. Declare that this is a time-barred debt even if it WERE mine, and they should pound sand

Given your statement that you "have never ever used a check cashing service" and the results that come up when you google the sender, it seems like the only logical things would be asking for detail about the alleged debt or ignoring it (but not trashing the letter and, instead, keeping it in the event something happens when you file your 2020 taxes next year).

Can they really just issue tax forms to biff up my taxes without any kind of proof or connection to reality... or is this a fake, made-up form to scare me into sending them money?

Someone can file a 1099 with the IRS and, if you don't declare the income, you may end up with an issue to deal with. It sounds, however, like this is a scam.

Is there a way to check to see if forms like these have been filed?

No.

 

[Taxing Matters]

No.

Actually, the answer is yes, there is a way to learn if the Form 1099-C was filed, though not right away. Taxpayers may obtain transcripts from the IRS of all the 1099s, W-2s, etc, that the IRS received for a particular tax year once all those are loaded on the IRS system. So for 2020 those transcripts won't be available until next year. While the options to get these transcripts right now is limited because of reduced operations of the IRS due to the pandemic, perhaps a year from now the IRS will be functioning normally and it'll be easier to get them.

 

[LdiJ]

Actually, the answer is yes, there is a way to learn if the Form 1099-C was filed, though not right away. Taxpayers may obtain transcripts from the IRS of all the 1099s, W-2s, etc, that the IRS received for a particular tax year once all those are loaded on the IRS system. So for 2020 those transcripts won't be available until next year. While the options to get these transcripts right now is limited because of reduced operations of the IRS due to the pandemic, perhaps a year from now the IRS will be functioning normally and it'll be easier to get them.

In a normal tax year the transcripts would be available about May/June of the year. So, under normal circumstances transcripts would be available about now, for 2019 income. I have seen a couple of people manage to get 2019 transcripts, so they might be automated enough that they weren't slowed down by the furloughs.

 

[Taxing Matters]

In a normal tax year the transcripts would be available about May/June of the year. So, under normal circumstances transcripts would be available about now, for 2019 income. I have seen a couple of people manage to get 2019 transcripts, so they might be automated enough that they weren't slowed down by the furloughs.

Right. But the OP's 1099 apparently would be for 2020, so in that case it would be about a year from now before that was available.

 

[LdiJ]

Right. But the OP's 1099 apparently would be for 2020, so in that case it would be about a year from now before that was available.

Yes, I am aware. I was just pointing out that the furlough may not have slowed things down much where transcripts are concerned.

 

[Taxing Matters]

Yes, I am aware. I was just pointing out that the furlough may not have slowed things down much where transcripts are concerned.

Getting them loaded on the system seems to be ok. But given that the IRS currently will not mail them and a lot of IRS offices are closed, the only way currently to get them is to sign up for the online transcript system, and some people have had trouble with that recently. Hopefully the IRS will resume at least sending them by mail before long.

 

[LdiJ]

Getting them loaded on the system seems to be ok. But given that the IRS currently will not mail them and a lot of IRS offices are closed, the only way currently to get them is to sign up for the online transcript system, and some people have had trouble with that recently. Hopefully the IRS will resume at least sending them by mail before long.

I just hope that the IRS offices get re-opened to full services soon. I have a lot of things pending that can't be dealt with right now and its frustrating. Transcripts are almost the least of it. I have a few things of the ilk that generally won't get resolved without a face to face appointment at a local office.