Since receiving this 1099C from Cap 1 last week, I'm trying to figure out the best way to proceed. My bookkeeper said she can file an amended return if that's what I want, or she will wait and submit it next year with my taxes then. The kicker is, this is for the year 2000, and cap one has just now sent this out! Anybody in the tax field, what is the best route to take, and can I get in trouble for not sending an amended return right away? Patti
If you don't file an amended return, the IRS's computers will match the 1099 against your current return sometime within the next year and a half or so and send you a letter asking why it wasn't reported. It's not really proper to include a 2002 1099 on a 2003 return so an amended return is the correct way to handle this.
I understand your point cannoda, but the problem is that Cap 1 just sent this 1099 stating there was a problem with their records, and the 1099 is for the year 2000!! It was just received last week. Is there some kind of limit to the amount of time they can do this? Clearly a 3 year error in their reporting is a bit questionable.
Patti, don't even worry about it right now, if you've already filed. First of all an OC has until Feb 1st to send a 1099. That's the LAW! Cannoda is right about matching however, it'll take about 3 years, IF (and that's a huge IF) they even catch it in the first place. IRS gets about 2.5 BILLION information returns (that's what a 1099 is) per year. They're woefully illprepared to handle them all. If they do you'll just have to pay the tax and a small fine. At that point, I'd send a check for the tax and tell them to stick the fine as it's obviously Cap 1s fault. Save the envelope the 1099 came in. Hopefully you can read the postmark.
Butch, I've already given a copy of the 1099, the Envelope, and the collection letter for this account from the CA, to my bookkeeper. thanks for making me feel better about it!
You should amend your 2000 return, BUT keep in mind the following: Is the amount of forgiven debt disputed? If so, it is not taxable. Did you file BK in 2000? If so, the 1099C is erroneous and the amount is not taxable Do a Personal Balance Sheet (Assets Less Liabilities) as of December 21, 2000. Are your liabilities more than your assets? If so, the 1099C amount is not taxable. Those are the 3 exceptions to the taxability of cancelled debt listed in IRC 108. I am an Enrolled Agent with over 25 yars experience in hsi field.
Re: Re: income tax help, please? How can it be income if you still owe a CA for it? Also if you pay taxes on it how could you owe a CA for it.?
Re: Re: income tax help, please? thats what I want to know, lb! If this was in fact written of in 2000, why did I get a collection letter in February from OSI?
Re: Re: Re: income tax help, please? This whole thing is a set up to force you to pay both the tax and the debt.
Re: Re: Re: Re: income tax help, please? What puzzles me is how do you owe tax on a so called forgiven debt that a CA can't validate.? If the CA can't validate the account then there was never any debt to forgive.
Re: Re: Re: Re: income tax help, please? now I'm pissed off and TOTALLY confused!! EQ shows dola on this account as 01-01. TU shows closed 03-02, as does EX!! WTF??? And this 1099C was issued for 2000? I have had only ONE account with Cap 1!!!
