I got another letter from the local attorney saying that my $1241.00 balance can be settle between 50-90 percent...but I'll be responsible to the IRS for the rest or something. Is this illegal ..isn't it called "overshadowing" or something? This debt was already paid off. I already have them on two violations. I want to rack up as many as possible. Any case law would be helpful.
Hi Exodus, Welcome. First, no, this is not "overshadowing". Second, I've been working on this issue. When a "debt" is settled for less than the full amount the creditor will issue a 1099misc for the "forgiven amount" which you must include on your tax return and pay taxes on. HOWEVER: This is entirely predicated on the fact that the "debt" is "legitimate". If the debt is NOT "legitimate" then the preposterous proposition that we must pay a tax on the "forgiven amount" collapses. Therefore, in the case of an OC or CA which fails to fully validate a "debt", we can assert the position that this debt is NOT legitmate (but merely paid to stop the harassment) and therefore no taxes are due. See? .
Thanks for your help. Also, isn't it illegal for them to reference the IRS in a sense that they make it seem like the law firm and the IRS are working hand in hand. That's the way the letter reads. Yes, this is in reference to my other post. Also, the amount that they are requesting is less than Wolpoff & Abramson origianlly requested. Where are all these funny numbers coming from? I never even signed anything to get this card, it was an over the phone application. The interest being charged I think was or is 39.64%...is this legal? If no, then how can they collect on a debt that doesn't match laws regarding the maximun interest to be charged? I'm just trying to think of every possible situation here. Thanks again!
Re: Re: IRS reference illegal? even for "delinquent accounts?" I thought there was a max that could be charged one an account was "charged off" etc...
Re: Re: IRS reference illegal? It's only illegal if they represent that they are DIRECTLY working with the IRS. Saying that we'll fill out a 1099 for $X,XXX.XX of INCOME on the forgiven amount is not saying that... Basically they're trying to say, is that we're such great guys *BARF* we'll pay you a 'salary' to pay this account now. (does that make sense)
Re: Re: IRS reference illegal? Had this happen when I had a mortgage forgiven to the tune of $150k. The debt was valid, but all I had to show was that I had no assets to reflect this "gift". It's a legit path for IRS to at least look at your finances. Suppose you had a $100k loan that was forgiven. That could effectively be a $100k gift, which gets their attention real fast.
