Portfolio Recovery Associates Fraudulent 1099-C

[Ritchie007]

Hello, I am from Arizona. I have paid off everyone. My Credt is clear.

 

But yesterday I received a 1099_C from

Portfolio Recovery Associates

POB 12914

Norfolk, VA 23541

757-519-9300

 

Creditor's Federal Identification Number 541-79-4735

Amount 2556.17

Debt Description - Security Pacific Credit Card

Date the FAKE debt was cancelled - 12/11/2007

 

 

I have countless credit reports from all three agencies for 2007. Portfolio Recovery Associates is not in there. Security Pacific Credit Card is not in there.

 

I just pulled another credit report January 2008. My credit is finally clear. There is one negative on it. But I have the PAID paperwork. And the one negative is a different company.

 

this is the first that I have seen PRA or Security pacific credit card.

 

 

 

I just called the company. She states the original charge off was from a credit card in 1996. And it has been bought and sold numerous times since then. She states that I sent a cease and desist letter in July of 2007. And the result of that letter is this cancellation of debt. she was vague. But apparently I sent a company a cease and desist and PRA bought this debt off of that company. so it ooks like PRA boought a debt just so they can forgive it.

 

She says she is making a note that I refuse to pay the debt.

I told her she can make all the notes she wants because

1. they alread "cancelled" the debt

2. My Credit from all three beuraus are perfectly clear.

3. I have never heard of them or security pacific credit card.

 

 

Anyway I do not know the validity of this debt. For all I know they just got a hold of my information and decided to cancel a debt that never existed.

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[hurricanesfans27]

sue them.

[walterg55]

If you are ABSOLUTELY sure about Security Pacific then sue. My bet is you had a CO from Security Pacific that has now gone thru multiple hands and is cancelled. I would consult a CPA on this but just because a debt has been CO doesn't mean it died as we all know.. These guys are suppose to issue a 1099C when a debt is forgiven and looks like one has done so. The question is; does a JDB who purchased the rights to try and collect X dollars owed but only paid Y for that right have the right to issue a 1099C for the original amount X. My guess is yes.

Edited February 5, 2008 by walterg55

[centex]

A number of older chargeoffs are resulting in 1099-C issuance...there was a thread last night about someone who got one for something from circa 1993. I believe flacorps offered some insight into the process in response. The fact that something has aged off of a report does not necessarily mean that the IRS won't follow up on the document...you need to be proactive in addressing the potential liability.

 

As part of your legwork, you will want to run a backtrace on the original company because some banks change names through mergers and acquisitions more frequently than some people change their underwear.

[Ritchie007]

But my credit reports should show a trail of this. at least a little something to give me an idea of who it is i supposedly owe.

 

but my credit reports show nothing.

 

The "supposed" original charge off was in 1996. It is 2008

 

My credit report from April 2007 only shows two different companies that I owe money too. And they have been paid. and neither of them are PRA or Security Pacific. She says I sent a cease and desist in July 2007.

But in July of 2007 I was more concerned about paying people off rather than sending DV letters.

Edited February 5, 2008 by Ritchie007

[Ritchie007]

so if I can't figure out who these people are...... should I just pay the IRS?

 

Will this "debt" be purchased by anyone else at this point?

 

 

I can just see it. a $50 debt being bought by 100 different agencies. And each and every single one of them deciding to "cancel" my debt.

[centex]

But my credit reports should show a trail of this. at least a little something to give me an idea of who it is i supposedly owe.

 

but my credit reports show nothing.

 

The "supposed" original charge off was in 1996. It is 2008

 

My credit report from April 2007 only shows two different companies that I owe money too. And they have been paid. and neither of them are PRA or Security Pacific. She says I sent a cease and desist in July 2007.

But in July of 2007 I was more concerned about paying people off rather than sending DV letters.

 

A charge-off from 1996 CANNOT report in any form or fashion as a tradeline without being prima facie evidence of reaging. As such, unless you look to your reports from 2003 and prior, you shouldn't see any tradelines associated with the underlying claim...

 

You need to be proactive with the IRS. Given the limitations period, there is an argument that might be able to be advanced that the proper time for the 1099C was no less than five years ago and arguably a decade ago. As a result of the delay, it creates a situation where you are adversely affected by a report of imputed income that, had it not been declared a decade ago, the IRS would likely be unable to pursue at this late date. You may want to consult a CPA or attorney that specializes in tax issues (neither category of which I fit). Flacorps appears to have more background in this area and may be around to answer later...barring that, you may also want to consult with the Taxpayer Advocate's Office with the IRS- they are staff that actually seem to have a clue and try to help.

[Ritchie007]

sounds so complicated and expensive.

 

Is it okay if I just do the easiest thing?

The easiest thing would be to file it with my taxes. After all the 1099-C is for 2007. I am just liable for 25% of it.

 

I only earned 25,000 -30,000 last year..... at the very most.

With a wife and two kids. I doubt I will pay a thing. True it might make my refund less. But I am not too worried about that.

 

I know it is like admitting to a crime I did not commit. I am just worried i might end up opening another can of worms.

My credit reports might be good now. But they were not always that way.

[hurricanesfans27]

with your income you wont have to pay a thing. but you could lose with EIC a little.

[pryan67]

If you are ABSOLUTELY sure about Security Pacific then sue. My bet is you had a CO from Security Pacific that has now gone thru multiple hands and is cancelled. I would consult a CPA on this but just because a debt has been CO doesn't mean it died as we all know.. These guys are suppose to issue a 1099C when a debt is forgiven and looks like one has done so. The question is; does a JDB who purchased the rights to try and collect X dollars owed but only paid Y for that right have the right to issue a 1099C for the original amount X. My guess is yes.

 

 

I'd have to disagree...

 

if that's the case...then why can't I donate a shirt to a charity and claim that it's REALLY worth 5,987.34 instead of 4 bucks?

[walterg55]

If you are ABSOLUTELY sure about Security Pacific then sue. My bet is you had a CO from Security Pacific that has now gone thru multiple hands and is cancelled. I would consult a CPA on this but just because a debt has been CO doesn't mean it died as we all know.. These guys are suppose to issue a 1099C when a debt is forgiven and looks like one has done so. The question is; does a JDB who purchased the rights to try and collect X dollars owed but only paid Y for that right have the right to issue a 1099C for the original amount X. My guess is yes.

 

 

I'd have to disagree...

 

if that's the case...then why can't I donate a shirt to a charity and claim that it's REALLY worth 5,987.34 instead of 4 bucks?

 

Thats true except that the JDB has an argument that the true value is the uderlying debt (which is still owed)

and that is what the IRS is concerned with; "no free money". Your T shirt cannot establish that value. Uless it is autographed by Elvis

[TheNewestGuy]

Agree with walter on that. As far as the IRS is concerned the original amount is what counts as 'earnings.'

[hoapres]

Don't use the telephone.

 

I would send a CMRRR letter requesting a corrected 1099C with the amount of $0.00 or any documentation that supports the factual contention that you owe the debt. If you don't get a response then send another letter with either an intent to sue or report Portfolio to the IRS for filing a false and fraudulent 1099C. If the response is simply a piece of paper saying that "You owe the money" then as above simply send a letter saying that doesn't establish anything.

 

Play dumb and see what Portfolio coughs up.

[hoapres]

Agree with walter on that. As far as the IRS is concerned the original amount is what counts as 'earnings.'

 

IF the debt is time barred by SOL then it might be not "owed". The issuance of the 1099C does not automatically make it taxable. The most common exception would be to show that you are insolvent. If you meet the insolvency test then the 1099C cancellation of debt won't be taxable.

[walterg55]

The real problem here is IRS document matching will flag this 1099C as missing on your tax return and generate an inquiry/notice to you with penalities and interest. IMHO You must first assume the 1099 is valid to avoid interest and penalties (mitigation of damages). I agree that you would then pursue various steps including a lawsuit with Portfolio.

Edited February 5, 2008 by walterg55

[toopooor]

if that's the case...then why can't I donate a shirt to a charity and claim that it's REALLY worth 5,987.34 instead of 4 bucks?

 

or claim the value of the shirt when new...

[mr.zero]

This appears to be Portfolio's new game. I got my Portfolio 1099c yesterday in the mail. They are forgiving a debt that was charged-off back in 1995, so the statute of limitations expired in 2002 sometime.

 

My guess is that you probably owed something late in the 90s that has long since dropped all off of your reports. Security Pacific may not be the name of the bank you dealt with at the time. They could have changed names, or they may be the bank that bought your bank. Or maybe you never owed this debt, and this is a huge mistake.

 

If you do pay the 1099, there is one consolation. If any collector tries to collect on it in the future, you have a nice lawsuit against them. Once the debt is 1099d, it is forgiven. Done. Forever. So you don't need to worry about that.

 

However, you do need to deal with it one way or the other. If you ignore it, sooner or later the IRS may notice, and then you owe penalties and fees too.

 

In my case, I'm pretty sure I did originally owe this money. I don't really know if Portfolio has the legal right to forgive it though. I also don't know how they came up with the amount they have claimed. There was no accounting or information; just a form.

 

How do you contest a 1099c? Do I just write Portfolio and start arguing over the amount? How does the fact that it is SOL play into this? From reading the IRS documents, it sounds like that doesn't really mean anything. SOL is one of the possible events that generate a 1099, so I guess I could argue that this should be on my 2002 taxes, not the 2007 ones. Not sure that would help much.

[KYBOSH]

Not a bad idea as far as scum bag collectors go.

 

They have all this useless paper piling up in there offices with no real chance of collecting.

 

So why not cancel the debt and take a big tax write-off on all the $$$ that you suckered helpless ppl over the years.

Not a bad idea at all. 2 cents on the dollar and you get to writeoff the original debt plus years of interest at the default rate.

 

Their CPAs must have been working over the xmas holidays...

[pawtx]

Subscribing...my nephew just called and said he received a 1099C in today's mail.

[hurricanesfans27]

Subscribing...my nephew just called and said he received a 1099C in today's mail.

 

 

I got one too but only for 250 no biggie

[hoapres]

This appears to be Portfolio's new game. I got my Portfolio 1099c yesterday in the mail. They are forgiving a debt that was charged-off back in 1995, so the statute of limitations expired in 2002 sometime.

 

 

O.K.

 

 

 

My guess is that you probably owed something late in the 90s that has long since dropped all off of your reports. Security Pacific may not be the name of the bank you dealt with at the time. They could have changed names, or they may be the bank that bought your bank. Or maybe you never owed this debt, and this is a huge mistake.

 

 

The reason I suggest CMRRR is to force Portfolio to cough up the evidence. If all they have is an assignment then you might be able to argue that is insufficient proof. If they don't cough up anything then you could also try filing with the IRS a false and/or fraudulent 1099C filing.

 

If you don't get an adequate response then you can always send an Intent to Sue letter and follow up with a lawsuit.

 

 

 

If you do pay the 1099, there is one consolation. If any collector tries to collect on it in the future, you have a nice lawsuit against them. Once the debt is 1099d, it is forgiven. Done. Forever. So you don't need to worry about that.

 

 

If the SOL has passed then it is moot. The debt wasn't legally collectable.

 

 

 

However, you do need to deal with it one way or the other. If you ignore it, sooner or later the IRS may notice, and then you owe penalties and fees too.

 

 

If the IRS later asks about the 1099 then you can make the argument that the debt was discharged in the distant past. I don't know if that argument will work. If a small amount of money is at issue then you can send the matter off to the IRS small claims tax court. If a large amount of money is at issue then you can send the matter off to IRS tax court. The other option should you have the financial resources is to pay the amount in dispute because of the 1099C and sue the U.S. government in Federal District Court. Forum shopping does have its advantages as I suspect the regular Federal court is likely to be not as biased for the IRS as the tax court. If this is an issue of first impression (i.e. The issue of tax liabilities for old discharged debts not being raised before) then the IRS is likely to be bringing out their best legal team.

 

The other option would be to get an opinion letter from the IRS.

 

 

 

In my case, I'm pretty sure I did originally owe this money. I don't really know if Portfolio has the legal right to forgive it though. I also don't know how they came up with the amount they have claimed. There was no accounting or information; just a form.

 

 

See above.

 

Send a CMRRR and make Portfolio cough up the evidence.

 

 

 

How do you contest a 1099c?

 

 

See above.

 

 

 

Do I just write Portfolio and start arguing over the amount?

 

 

See above.

 

Get the EVIDENCE from Portfolio. Play dumb and say you don't understand. IF someone issues you a 1099C then they are (at least for me) going to have to show the factual basis for its issuance.

 

 

 

How does the fact that it is SOL play into this?

 

 

Don't know.

 

 

 

From reading the IRS documents, it sounds like that doesn't really mean anything. SOL is one of the possible events that generate a 1099, so I guess I could argue that this should be on my 2002 taxes, not the 2007 ones. Not sure that would help much.

 

 

You are asking the right questions but it is not clear what the answer is.

 

[pryan67]

If you are ABSOLUTELY sure about Security Pacific then sue. My bet is you had a CO from Security Pacific that has now gone thru multiple hands and is cancelled. I would consult a CPA on this but just because a debt has been CO doesn't mean it died as we all know.. These guys are suppose to issue a 1099C when a debt is forgiven and looks like one has done so. The question is; does a JDB who purchased the rights to try and collect X dollars owed but only paid Y for that right have the right to issue a 1099C for the original amount X. My guess is yes.

 

 

I'd have to disagree...

 

if that's the case...then why can't I donate a shirt to a charity and claim that it's REALLY worth 5,987.34 instead of 4 bucks?

 

Thats true except that the JDB has an argument that the true value is the uderlying debt (which is still owed)

and that is what the IRS is concerned with; "no free money". Your T shirt cannot establish that value. Uless it is autographed by Elvis

 

 

 

ah,but I CAN establish that value....since I own the shirt, I set the price...I say it's worth 5,987.34....therefore it IS...but then you say "but no one will pay that"

 

therefore the true value of the underlying debt is NOT the total amount they claim is due, but rather what someone would pay for it...

[Ritchie007]

If the SOL has passed then it is moot. The debt wasn't legally collectable.

 

The original charge off was supposedly in 1996.

SOL in Arizona is 3 years. that would make it 1999.

 

Can they forgive a debt that is not legally collectable?

[hurricanesfans27]

If the SOL has passed then it is moot. The debt wasn't legally collectable.

 

The original charge off was supposedly in 1996.

SOL in Arizona is 3 years. that would make it 1999.

 

Can they forgive a debt that is not legally collectable?

 

evidently so.. it happened to me