1099-C on an OIC (Offer in Compromise) Here's a more definitive reference: http://www.irs.gov/pub/irs-sca/1998-039.pdf Here's the important part: Cancellation of a tax debt by means of an offer in compromise does not give rise to discharge of indebtedness income. Eagle Asbestos & Packing Co. v. United States, 348 F.2d 528 (Ct. Cl. 1965). The court in Eagle Asbestos concluded that a compromise of the interest portion of a tax debt did not give rise to income from the discharge of indebtedness because "[t]he effect of the compromise settlement itself and the intentions of the parties in entering into it was to extinguish all tax liabilities included in the items making up the compromise." Such an intent could not be fulfilled if taxable income arose from the agreement. This rationale applies equally to cancellation of a tax debt itself, as well as interest on a tax debt. Therefore, no Form 1099-C is required to be issued. However, we note that if the IRS cancels a debt that is not a tax debt, the amount cancelled is includible in discharge of indebtedness income and a Form 1099-C should be issued.
Thanks 420Greg for your informative post about 1099s. Unfortunately more and more tax documents, like 1099s and W2s are sent out without being postmarked. A former employer of mine - headquartered in Minneapolis, my job was here here in Sacramento, CA sent out W2s "supposedly" on January 31, but most of us at the work site received ours after February 10. No postmarks on any of our envelopes.
W-2s also go to the Social Security Administration, along with a W-3, which is a summary document. I believe most firms send them electronically now. If they don't I think they'd make sure they were postmarked, as they are subject to a penalty for late filing. So the IRS and courts would probably assume that they were all mailed at the same time.
