IAAL, question about letter from an attorney

[Whyte Noise]

What is the name of your state? Missouri

A little over 2 years age I made a post about an attorney my husband had consulted with. It can be referenced here:

https://forum.freeadvice.com/showthread.php?t=117166

In short, the attorney wrote my husband a letter soliciting his business after the initial consultation, and charged him for the time it took to write the letter. You responded with a letter for me to take to him, and I did. We haven't heard anything else from him.

Until yesterday.

We received the following letter in the mail, and I'd like to find out the legalities of this letter before I call them and say something I shouldn't.

"Dear XXXXX,

You have had an outstanding balance of $66.00 with our firm for quite some time. We want to give you one final opportunity to pay your bill before you potentially incur a tax obligation for that failure to pay.

Should we decide that we are going to take no further collection action, we will advise you and send a 1099 to you and to the Internal Revenue Service. When that 1099 goes to the IRS, you will have a responsibliity to report to them that amount as additional income and, if may be necessary, for you to pay taxes on the amount of money which you have failed to pay for our fees.

Please pay your balance within 10 days so this action will not be necessary or call to make arrangements to guarantee your balance. The 1099s will be sent by the end of January, 2005.

If you have questions concerning this matter, please feel free to contact me.

(Attorney signature)"


Send a 1099 for this $66.00 "balance" we supposedly owe him for that letter he typed up to solicit our business? Don't ask me how it went from $22.00 on the original invoice up to $66.00 now because I have no idea.

The $66 we supposedly owe him isn't "additional income". It's not like he paid US, and didn't take out taxes on it. All money my husband makes is taxed already.

Is this a legal practice by this attorney? And if it is, wouldn't ALL creditors be sending out 1099s to people that "owe" them?

This letter seems odd to me, as I've never heard of someone sending you a 1099 for something like this. Would you please clarify for me, before I call the attorney and tell him to take a long walk off a short pier.....?

 

[LdiJ]

What is the name of your state? Missouri

A little over 2 years age I made a post about an attorney my husband had consulted with. It can be referenced here:

https://forum.freeadvice.com/showthread.php?t=117166

In short, the attorney wrote my husband a letter soliciting his business after the initial consultation, and charged him for the time it took to write the letter. You responded with a letter for me to take to him, and I did. We haven't heard anything else from him.

Until yesterday.

We received the following letter in the mail, and I'd like to find out the legalities of this letter before I call them and say something I shouldn't.

"Dear XXXXX,

You have had an outstanding balance of $66.00 with our firm for quite some time. We want to give you one final opportunity to pay your bill before you potentially incur a tax obligation for that failure to pay.

Should we decide that we are going to take no further collection action, we will advise you and send a 1099 to you and to the Internal Revenue Service. When that 1099 goes to the IRS, you will have a responsibliity to report to them that amount as additional income and, if may be necessary, for you to pay taxes on the amount of money which you have failed to pay for our fees.

Please pay your balance within 10 days so this action will not be necessary or call to make arrangements to guarantee your balance. The 1099s will be sent by the end of January, 2005.

If you have questions concerning this matter, please feel free to contact me.

(Attorney signature)"


Send a 1099 for this $66.00 "balance" we supposedly owe him for that letter he typed up to solicit our business? Don't ask me how it went from $22.00 on the original invoice up to $66.00 now because I have no idea.

The $66 we supposedly owe him isn't "additional income". It's not like he paid US, and didn't take out taxes on it. All money my husband makes is taxed already.

Is this a legal practice by this attorney? And if it is, wouldn't ALL creditors be sending out 1099s to people that "owe" them?

This letter seems odd to me, as I've never heard of someone sending you a 1099 for something like this. Would you please clarify for me, before I call the attorney and tell him to take a long walk off a short pier.....?

This is a petty form of "revenge" that creditors often take. Particularly when they know a debt is uncollectable or the cost of collecting the debt would be greater than the debt itself. They hope that they will scare you into paying up. Its gone from 22.00 to 66.00 because the are adding late fees and interest. Their accountant is now telling them that they have to write it off...so they are doing this.

I hope that IAAL can help you with a method of responding to them. However, from a tax standpoint $66.00 would have a negligible effect on your tax return.

 

[Whyte Noise]

Oh, I'm not worried about the tax implications of it.

It pisses me off that he had the unmitigated gall to write my husband a letter to solicit his business after we had the initial consultation with him, charged my husband for the 20 minutes of time it took to write that letter when he was never retained by us in the first place, and now is threatening to send us and the IRS a 1099 for the amount of money he feels we owe him as "fees" for that soliciation letter he wrote.

We never retained this man as counsel. We never signed an attorney/client retainer agreement. We had one consultation with him which we paid for and that was it. We told him if we could come up with the retainer, we'd let him know. We couldn't... and he sent that letter to my husband "reminding" him that if he wanted to retain his services we'd have to pay the retainer... and then billed US for the time it took to write that letter. Now, we get this letter about an "oustanding balance" we supposedly owe for that letter he took upon himself to send us and a threat to send the 1099 to the IRS to report this $66 as income to my husband when it was already his damn income to start with. It's not unreported income. The attorney didn't pay my husband $66 and not take out taxes on it. My husbands employer takes taxes out every paycheck. The attorney was never an employer NOR an employee of my husbands (as we never retained him), so where does the 1099 come into this?

 

[LdiJ]

Oh, I'm not worried about the tax implications of it.

It pisses me off that he had the unmitigated gall to write my husband a letter to solicit his business after we had the initial consultation with him, charged my husband for the 20 minutes of time it took to write that letter when he was never retained by us in the first place, and now is threatening to send us and the IRS a 1099 for the amount of money he feels we owe him as "fees" for that soliciation letter he wrote.

We never retained this man as counsel. We never signed an attorney/client retainer agreement. We had one consultation with him which we paid for and that was it. We told him if we could come up with the retainer, we'd let him know. We couldn't... and he sent that letter to my husband "reminding" him that if he wanted to retain his services we'd have to pay the retainer... and then billed US for the time it took to write that letter. Now, we get this letter about an "oustanding balance" we supposedly owe for that letter he took upon himself to send us and a threat to send the 1099 to the IRS to report this $66 as income to my husband when it was already his damn income to start with. It's not unreported income. The attorney didn't pay my husband $66 and not take out taxes on it. My husbands employer takes taxes out every paycheck. The attorney was never an employer NOR an employee of my husbands (as we never retained him), so where does the 1099 come into this?

Its a form 1099C (Cancellation of Debt). Loans or other forms of credit are not taxable as income. However if someone defaults on a loan or a credit card etc. then the IRS's view is that they actually recieved income instead. That income would either be the proceeds of the loan, or the goods or services they recieved. Its something that companies are validly able to do, and under certain specific conditions are required to do.

However when its done on an account that is in dispute, where the creditor KNOWS that they cannot collect, then its done merely as petty revenge...as a way to complicate your life one way or the other, or to try to convince you to pay.

 

[critterperson]

Oh, I'm not worried about the tax implications of it.

It pisses me off that he had the unmitigated gall to write my husband a letter to solicit his business after we had the initial consultation with him, charged my husband for the 20 minutes of time it took to write that letter when he was never retained by us in the first place, and now is threatening to send us and the IRS a 1099 for the amount of money he feels we owe him as "fees" for that soliciation letter he wrote.

We never retained this man as counsel. We never signed an attorney/client retainer agreement. We had one consultation with him which we paid for and that was it. We told him if we could come up with the retainer, we'd let him know. We couldn't... and he sent that letter to my husband "reminding" him that if he wanted to retain his services we'd have to pay the retainer... and then billed US for the time it took to write that letter. Now, we get this letter about an "oustanding balance" we supposedly owe for that letter he took upon himself to send us and a threat to send the 1099 to the IRS to report this $66 as income to my husband when it was already his damn income to start with. It's not unreported income. The attorney didn't pay my husband $66 and not take out taxes on it. My husbands employer takes taxes out every paycheck. The attorney was never an employer NOR an employee of my husbands (as we never retained him), so where does the 1099 come into this?

MissouriGal,
In Illinois we have a department of professional regulation that you could report him to. I am not sure if you have one in Missouri but you could contact the Missouri Attorney Generals office an they may be able to help you. Just explain to them what he is doing and if they have a way of formally filing a complaint against his practice license. Good Luck

 

[BelizeBreeze]

MG, is this attorney in Missouri or Tennessee?

 

[LdiJ]

One more thing....they often deliberately send out the 1099s late...hoping that you have already filed your taxes and will either end up with penalties or will have to deal with the hassle of amending your taxes. They have even been known to not even send them to the IRS, but only to you.

So, you might want to put off filing your return until late March.

 

[Whyte Noise]

BB, this is a Missouri attorney. We initially consulted with him in September of 2002.

LdiJ, I understand about the 1099C. But, we never received goods or services from this attorney. We paid the initial consultation fee in full in his office that day. His retainer was $500 to $1,000 depending on what type of case my husband wanted to pursue. We never retained the man. He never provided any service other than the consultation that he was paid in full for. (Unless you count him writing us a letter to solicit business from us as a "service".)

 

[BelizeBreeze]

Then contact any of the three offices listed below with copies of all checks, contracts (ya, right) and e-mails/letters and ask them for an opinion.

Fee Dispute Resolution
The Missouri Bar
P.O. Box 119
Jefferson City, MO 65102
Telephone: (573) 635-4128
Email: [email protected]

St. Louis:
Fee Dispute Resolution
Bar Association of Metropolitan St. Louis
One Metropolitan Square
Suite 1400
St. Louis, MO 63102
Telephone: (314) 421-4134

Kansas City:
Fee Dispute Resolution
Kansas City Metropolitan Bar Association
1125 Grand Ave.
Suite 400
Kansas City, MO 64106
Telephone: (816) 474-4322