Leg to stand on?

How big an account was it that you would be subject to years and years of back taxes? Is that the story they told you?

Did they send you the letter required by FDCPA to notify you of your right to dispute and request validation, and then attempt to discourage such dispute or validation request?

Did they provide any indication what account and original creditor this was from, and is it even your debt? If the original company was bought, the records might even be difficult to obtain and verify, or they might be attempting to collect based on tracing your name alone, and it could be someone else's debt.

Sounds like they are turning their recently enforced legal requirements into an opportunity to get you to restart the SOL clock, and pay the whole amount. Did they claim or imply you couldn't dispute the debt, since "the law requires them to report it to the IRS"? Did they claim that if you didn't pay them now, you would have to refile your old tax returns and pay taxes, interest and penalties on the whole amount?

CAs were recently required by Treasury to report debts that are not likely to be paid to the IRS if over $600, just like many other payments are required to be reported. But that does not mean the debt is necessarily legitimate, nor does it mean you can't dispute it or request validation, or that the whole amount is necessarily reportable income on which you owe taxes. Even if it were, the taxes would be a fraction of the debt they are trying to collect.


Comments by an Enrolled Agent on this matter would be appreciated.

Note: I am not an attorney, a tax professional, nor a CPA. I am just a consumer who tries to stay informed.

 

First, I would send to them via the mail a validation letter which would include that their phone call of xx/xx/xxxx was the first time that you have heard from them.

They can easily obtain the name, SSN, old addresses, etc from the credit files, and chances are good that if you obtain your credit files there is an inquiry from them on there, and most likely under the "Inquiries viewable by others" section.

You won't be responsible for *BACK* taxes, but it would be income for *THIS* year, since this is the year that it would be forgiven in. And the taxes should not be on the FEES and INTEREST, but the amount of the DEBT which would be forgiven.

If you search for 1099-C or 1099, however, you will find a number of posts discussing a number of to not have this counted as income.

Even if none of the exclusionary rules apply the amount of tax on $1,500 would be somewhere under about $200; and on $5,000 would be somewhere under about $600. These are guestimates, but they should be an idea.

 

You can always mail to a PO BOX, you don't need to have a street address for certified mail.

 

I hope your tape recorder was running, because there are LOADS of FDCPA violations in that small blurb.

1: An account was last paid on in 1996 and they will "turn it over to the IRS"? Under the Least Sophisticated Consumer Standard taht sounds like "we will have the IRS collect for us, and you don't want to deal with them". that is a violation of the following FDCPA Sections:

807(5): "(5) The threat to take any action that cannot legally be taken or that is not intended to be taken. "

807(10): "(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. "

2: That you will be responsible for years and year of taxes on back income is a patently false statement. The Collector is alluding to the Debt Forgiveness income under Internal revenue Code Section 108. that is income only in the year the debt is forgiven, and in no other year. Since it has not yet been forgiven (the attempt to collect is proof of that), the collector has violated FDCPA Sections 807(5) and 807(10) again.

Get a tape recorder and get this idiot to repeat this garbage. Play it for the Judge in Federal Court.

BTW, I am an Enrolled Agent per ontracks' request.

 

Make that 3 violations of 807(5) and 807(10). There is absolutely nothing a debt collector can do that would get the IRS to audit you.

And before you go paying them anything, remember that under IRS rules all fees, interest, etc must be backed out of the 1099C - they can only report principal.

Better yet - tell them that they can send YOU $1000 for the violations and you will forgive the other $5,000 and you won't even send THEM a 1099C.

 

So you should pay them, or else they will have you audited? And you will have to pay back taxes?

They are working hard to convince you not to dispute or request validation. They have tipped their hand and shown you what you can expect in legal compliance.

You can send your dispute/validation request, CRRR, to a P.O. Box. They can sign for it, or it comes back in a few weeks so you have a record that it went there and they refused it. Their failure to pick up their mail does not absolve them of their legal obligations.

"ss# and bday old addresses"
Were any of these actually yours? If so, it doesn't prove it is yours and they got it from the OC, since they could have got your name from a phone book and pulled your reports, but if they are not yours, it's a clue the debt probably isn't yours, either due to misidentification or ID theft.

Either way, you want the details of the debt in writing, not verbally over the phone, where they could deny they were actually conning you. That is why you dispute and request validation, which legally must be obtained from the OC and forwarded to you.

 

If they represented themselves as a lawyers office, they had better have been a lawyers office. If they were a lawyers office, they may already be running afoul of not only FDCPA, but their own state bar code of conduct, whether they themselves were actually attorneys, or only working under an attorney's direction.

"refusing to cooperate"? What are they implying, that you are committing a crime? Oh yeah, that's right, they are an "investigation service" now. I guess that means you have to cooperate, or what, they will arrest you? If they go too far with this, impersonating a police officer (or police detective, or whatever), is a felony.

But they are still trying to collect a debt originally owed to another, whether it is even your debt or not, so whatever they call themselves, they are a "debt collector", and required to comply with FDCPA, and probably state laws, too. And threats to sue when they won't or can't, or threats to arrest you, or charge you with a crime, when this is at most a civil debt matter, are FDCPA violations.

They sure have all the angles scripted out. If you are going to cheat, it hardly pays to only do it occasionally. It becomes a way of life. Have you done a search on them? Any similar reports from other consumers, or state AG or FTC action against them?

 

Did they say what company this CC was originally with, or what company bought it out?