Debt collectors can sometimes use hard ball tactics in attempts to make you pay outstanding debts. While they should follow certain requirements under the Fair Debt Collection Practices Act (FDCPA) that sometimes is not always the case.
One threat that debt collectors sometimes use is to threaten that they will report the debt to the Internal Revenue Service.
How Does the IRS Get Involved?
The way that the IRS can potentially get involved is through what is called a 1099-C form. The 1099-C form is used by creditors to report to the IRS debt that has been forgiven or discharged. The IRS can then count that forgiven debt amount as income for Federal tax purposes which can lead to a large tax bill. While this does not mean that the debt collector would necessarily obtain any payment since the tax would of course be due to IRS, the threat itself of involving the IRS can scare someone into paying a debt.
Also, what can be problematic is that debt collectors sometimes begin to make these and other sorts of threats against debtors for either unsubstantiated debts, disputed debts, or debts that are so old that they are beyond the statute of limitations to collect.
What Do I Do If I Receive a 1099-C?
Like other tax documents you receive from your employer or a bank every year that show the amount of income, interest, or other earnings, a 1099-C would be sent to you if a creditor claims to the IRS that it has cancelled a debt that you owe them.
Some experts argue that you should fight these in the event that they were filed improperly or untimely. For instance, if the creditor filed the form years after the statute of limitations on collecting the debt expired, it may be improper. Other ways in which the debt may be forgiven is if it is discharged in the course of a bankruptcy, if there is a foreclosure on the debtor’s property, or if the debtor and creditor come to an agreement to settle the debt for less than the original amount.
Contact a Knowledgeable Attorney For Help
If you are receiving harassing calls from debt collectors you should consider getting legal assistance to make sure that you are using all of the legal protections you have to protect your assets and to minimize harassment.
Contact the Keogh law firm to obtain help now. Call (866)726-1092 or contact us online to setup a Free Consultation.