BOA just started poisoning my EX report with C/O -- 4 years after last reported

tweak · March 25, 2015

I have an unpaid BOA CO (DOFD 09/2009).

They had not reported since 08/2010.

This January, they sent me a 1099-C debt cancellation notice.

I just checked the EX backdoor.

BOA updated on March 19.

There are no softs on EX from BOA, FIA, or any CA.

They filled in CO status for every month from March 2013 through March 2015!

I have never disputed this account or contacted BOA or any CA.

I was planning to leave this alone until early obsolete dispute time - so as not to have them update.

Has anyone else had this experience with a BOA charge-off?

AnnMichele · March 25, 2015

oh man that stinks Tweak! Are you saying that all of a sudden they just updated your report with info for the past 2 years??

tweak · March 25, 2015

oh man that stinks Tweak! Are you saying that all of a sudden they just updated your report with info for the past 2 years??

Yes. They must hate me.

Garandcollector · March 25, 2015

I stirred that ugly by disputing it, not on it's own just last month, sorry to hear that!

tweak · March 25, 2015

I stirred that ugly by disputing it, not on it's own just last month, sorry to hear that!

Yeah, sorry you are dealing with that as well.

I've only seen two reports of BOA CO deletes on CB ever - and neither are repeatable.

I almost made the mistake of disputing them when I started on credit repair.

The only thing that saved me (until now) was fear they would sue me - and win.

I guess I have nothing to lose by disputing at this point -- except that they could try to report for the full FCRA 7.5 years.

Edited March 25, 2015 by tweak

AnnMichele · March 25, 2015

That's crap. I mean seriously why do that?? It's quite annoying to me so I can only imagine how you feel.

tweak · March 25, 2015

That's crap. I mean seriously why do that?? It's quite annoying to me so I can only imagine how you feel.

Thanks, AnnMichele.

I'm trying to laugh at it.

Fortunately, I picked up my first two rebuilder cards in over a decade in Jan.

I was planning to stay on the farm anyway for 18 months until I have clean reports.

So CLIs are the only thing that might suffer -- but Cap1 and Disco have already seen the CO when they approved me.

BOA has nothing to gain from this.

Because they sent me a 1099-C, I don't think they could even accept payment if I wanted to give them $5000.

I might have to dust off my notes on this tradeline, and prepare a jack attack dispute and 623 letter -- just for sport, of course.

funkiehouse · March 26, 2015

tweak - You need to write the IRS about how late they issued the 1099. I think you can fight it but I can't remember because it's been a while since I did any reading about it. If you want I can post my 1099 notes for you. I intended to post them in a thread but never got around to it. Not sure if it will help at all but I have a lot of links and what what to do in different situations.

This article rambles on but there is some good info on page 2 if you can get through the blah, blah, blah...

http://blog.credit.com/2012/02/what-to-do-if-you-get-a-1099-c-for-an-old-debt-53603/

Edited March 26, 2015 by funkiehouse

funkiehouse · March 26, 2015

creditguy03 had a different but similar issue with BOA and CO reporting today as well.

http://creditboards.com/forums/index.php?showtopic=541849

tweak · March 26, 2015

tweak - You need to write the IRS about how late they issued the 1099. I think you can fight it but I can't remember because it's been a while since I did any reading about it. If you want I can post my 1099 notes for you. I intended to post them in a thread but never got around to it. Not sure if it will help at all but I have a lot of links and what what to do in different situations.

This article rambles on but there is some good info on page 2 if you can get through the blah, blah, blah...

http://blog.credit.com/2012/02/what-to-do-if-you-get-a-1099-c-for-an-old-debt-53603/

Thanks, funkiehouse.

I skimmed the article, and will read it in more depth.

The debt would still be within my state's 6-year SOL until 09/2015 (but for the "cancellation").

There were never collection attempts, except for form letters from CAs acting for the OC (last one sent 02/2014).

I cannot claim insolvency for 2014 (although I was insolvent at the time of default in 2009).

I've already filed my 2014 taxes including the 1099-C income.

I'll keep reading.

Any other notes you have would be greatly appreciated.

HouseBound0829 · March 26, 2015

Wow, Tweak, I am so sorry. Jeez a loo.... How awful.

funkiehouse · March 26, 2015

tweak - You need to write the IRS about how late they issued the 1099. I think you can fight it but I can't remember because it's been a while since I did any reading about it. If you want I can post my 1099 notes for you. I intended to post them in a thread but never got around to it. Not sure if it will help at all but I have a lot of links and what what to do in different situations.

This article rambles on but there is some good info on page 2 if you can get through the blah, blah, blah...

http://blog.credit.com/2012/02/what-to-do-if-you-get-a-1099-c-for-an-old-debt-53603/

Thanks, funkiehouse.

I skimmed the article, and will read it in more depth.

The debt would still be within my state's 6-year SOL until 09/2015 (but for the "cancellation").

There were never collection attempts, except for form letters from CAs acting for the OC (last one sent 02/2014).

I cannot claim insolvency for 2014 (although I was insolvent at the time of default in 2009).

I've already filed my 2014 taxes including the 1099-C income.

I'll keep reading.

Any other notes you have would be greatly appreciated.

I'll post the notes I have. Not sure if it will help in your situation, but there are links to other info that might help someone.

funkiehouse · March 26, 2015

Disclaimer: I am not a tax professional or an attorney so please only consider this information as a guide and not definitive advice on how to handle 1099’s. I cannot say that everything here is 100% correct for many reasons, such as law changes, court rulings and my own error. You should always consult with a tax pro ASAP if you receive a 1099-C.

What is a 1099?

A 1099 is a form completed by a debt owner when a Cancelation of Debt Income (CDI) of $600 or more is claimed. The IRS considers forgiven or canceled debt as income per U.S. IRS tax codes/laws.

What does a “real” 1099 look like?

http://www.irs.gov/pub/irs-pdf/f1099c.pdf

Can a 1099 be issued if I settled a debt for less than the amount owed?

Yes, and you should expect and plan on one being issued, if the remaining amount is canceled or forgiven and exceeds $600. However, if the remaining balance is then sold to a/another collector, the previous owner should not have issued a 1099 because the debt was not actually canceled or forgiven.

Are debt owners required to complete a 1099 if they forgive or cancel a debt?

Yes. If a full or partial debt is canceled or forgiven ($600+), U.S tax law requires a 1099 be issued. Per the IRS: Significant civil penalties, ranging up to 20% of the amount of indebtedness discharged, may be imposed on an applicable financial entity that intentionally disregards the information reporting requirements. So if they tell you that they are required to file a 1099 and they forgave a debt, they are not lying.

What is the timeframe that 1099s can be issued?

The company that issues a 1099 should issue it at the time the debt was canceled. However, a company can still issue a 1099 at any time but this gives you the upper hand the further out you receive it. If you receive a 1099 say 5 years after the debt was canceled you should write the IRS and explain the situation. Any documents you have that can support your case should be included. This is another great reason why you should keep any documents related to credit repair forever. You should consult a tax professional anytime you get a 1099.

http://blog.credit.com/2012/02/what-to-do-if-you-get-a-1099-c-for-an-old-debt/

http://www.avvo.com/legal-answers/what-is-the-statute-of-limitations-of-sending-a-10-306085.html

http://creditboards.com/forums/index.php?showtopic=460897

Can a debt collector (JDB) issue a 1099-C?

Yes and no.

If you have settled a debt with a debt collector then they can issue a 1099 for the canceled part of debt, if over $600. The IRS still considers canceled debt from a debt collector as income. The debt collector, must own the debt and they must be able to prove that the debt is yours. This is another reason why you should consider all possible outcomes when paying/settling a debt.

If you have not made any payments in 36 months and they have not conducted any significant collection activity in the past 12 months, they can issue you a 1099. If you get a 1099 in this situation you must send a DV letter to the CA and make them prove that the debt is yours and they own it. If they don’t provide this proof to you then you should include a letter with your income tax return that the CA has not proven that the debt is yours or that they own it, if that’s the case. You need to give the CA time to respond (30 days+ 5 snail mail) and don’t just go telling the IRS that it is not yours without making an attempt to prove your case.

If you go ahead and file your tax return because your expecting a return and you know about the 1099; then CA then proves the debt is yours, then you may be in a situation where you owe money to the IRS. It will depend on the tax burden, if any, that the 1099 creates. You need to be clear in your DV that you are requiring documents that prove ownership of the debt and that in fact it is yours. To be on the safe side, if they provide validation equal to what is required by the FDCPA, then assume that’s also going to be enough for the IRS. Don’t go getting yourself into a situation with the IRS and get yourself flagged for audits.

http://creditboards.com/forums/index.php?showtopic=483883

If the debt collector does not own the debt and are just collecting on behalf of someone else, then they cannot issue a 1099 because they are not the legal owners, therefore they cannot forgive a debt.

What can the original creditor or a debt collector include in a 1099 and how does the IRS define debt when it comes to 1099s?

An original creditor can file a 1099 for the stated principal, stated interest, fees, penalties, administrative costs, and fines. The IRS defines debt, as explained to creditors on the 1099 instructions, as follows: “A debt is any amount owed to you, including stated principal, stated interest, fees, penalties, administrative costs, and fines. The amount of debt canceled may be all or only part of the total amount owed. However, for a lending transaction, you are required to report only the stated principal.”

A debt collector (JDB) who files a 1099 should only report the amount of the debt that was purchased, and then forgiven, and cannot include interest and collection fees in the principle 1099 amount.

http://www.irs.gov/pub/irs-pdf/i1099ac.pdf

http://creditboards.com/forums/index.php?showtopic=438542

What do I do at tax time with my 1099?

When a debt owner completes a 1099, they are required to send you and the IRS a copy of the form and you are required to report the 1099 on your income tax filing during the year it was issued. The amount of the 1099 is reported on Line 21 “Other Income” of a 1040 IRS tax filing form.

What happens if I don’t get a copy of the 1099 because I moved or I received it after filing my taxes for that year?

If you claim that you never received a copy of the 1099 you are still responsible for paying the taxes due. If you did not receive one, or forgot that you received one, you will be required to file an amended tax return for the year it was issued, regardless of who is at fault for not getting the 1099 to you. It is not uncommon for an enormous amount of 1099s to be issued after Christmas. Not including 1099 information can lead to an audit, no matter the reason why it didn’t get reported. Interest and fees can build quickly if you do not take care of a 1099 as soon as you find out about it. Be proactive; don’t wait until they come looking for you to resolve a 1099 issue.

http://creditboards.com/forums/index.php?showtopic=464070

Does a creditor make money from issuing a 1099?

The issuing of a1099 does not make money for the debt owner. The issuing of a 1099 is required by law and only benefits the IRS, unless you consider the use of your tax dollars as a benefit to you. We’re not going there in this thread though.

What should I do if a 1099 was issued by an OC and then a collector buys the debt and tries to collect?

You should notify the IRS and file a complaint with the CFPB against the company that issued the 1099 and then sold the remaining debt. If you settle a debt, you should include in your agreement that the settling company will not sell the remaining debt to another company. If a new CA is reporting the remaining debt, and a 1099 was issued by the previous owner, you should notify the CA of this (modified DV) and you should file disputes with the CRAs. If they refuse to remove it, file complaints against the CRA and the CA with the CFPB. Hopefully, you would have already sent a DV to the CA once you noticed it was being reported.

When can a 1099 be issued?

The most common situations are:

1. A 1099 can be issued if you have not paid anything on a debt for at least 3 years and there has been no significant collection activity for that account in the last 12 months.

2. You negotiated a settlement to pay a debt for less than the amount you owed and the creditor forgave the rest.

3. You owned a home that went into foreclosure and there was a deficiency (a difference between the home’s value and what you owed on it), which was either forgiven or remains unpaid.

4. You sold a home in a “short sale” where the lender agreed to accept less than the full balance due.

Does issuing a 1099 cancel a debt and make a CA stop trying to collect it?

Not necessarily. If you receive a 1099-C because you paid off the debt for less than the full amount due in a negotiated settlement, then you shouldn’t be required to owe any more money. However, if the form was filed because you haven’t made payments for three years and they haven’t tried to collect recently, then you may still owe the debt. Your state’s statute of limitations may be more relevant in this type of situation.

http://finance.yahoo.com/news/1099-c-questions-answered-110011076.html

http://www.robertsandholland.com/siteFiles/News/08-15-13_Can%20the%20Issuance%20of%20Form%201099-C%20Cancel%20a%20Debt__EP….pdf

I received a 1099 after filing bankruptcy. Do I still have to pay the taxes on the canceled amount?

If a debt was included in a BK then you are not required to pay taxes and you should seek a cancelation for the 1099 issued for that debt. You will need to send proof that it was included to the company that issued the 1099. You should also contact the IRS and not just rely on the company that filed the 1099 to take care of it. If you can’t get the issuer to cancel it, then file a CFPB complaint and file IRS form 982:

http://www.irs.gov/pub/irs-pdf/f982.pdf

Can a debt collector make threats to issue a 1099 as a means to get you to pay a debt?

No. If a debt collector threatens to issue you a 1099, if you don’t pay a debt, that is a violation of the FDCPA and probably the Dodd-Frank Act as an abusive collection practice (need to verify). It may also be a violation of your states debt collection laws. If they end up filing a 1099 and have not met the legal requirements then you should report this to the IRS and file a CFPB complaint against that CA. If they are reporting on your reports then you should file disputes with the CRAs first and then with the CFPB. Also, you should include that you want the TL(s) removed from your reports for the violation.

What are the ways I can be exempt from paying the taxes on reported 1099 income?

1. Cancellation of qualified principal residence indebtedness.

2. Debt canceled in a Title 11 bankruptcy case.

3. Debt canceled due to insolvency.

4. Cancellation of qualified farm indebtedness.

5. Cancellation of qualified real property business indebtedness.

If you feel you meet any of these criteria you should use the following form when filing your income tax. It is highly recommended that you get your taxes done by a professional if you are including form 982 and not file your taxes online. You should also consult a tax professional if you are married filing jointly, you received a 1099 for a joint account, or the 1099 was from a debt obtain during a previous marriage.

http://www.irs.gov/pub/irs-pdf/f982.pdf

http://blog.credit.com/2011/03/1099-c-in-the-mail-how-to-avoid-taxes-on-cancelled-debt-14927/?utm_source=Yahoo&utm_medium=content&utm_content=IB_1&utm_campaign=1099c_top_questions

http://blog.credit.com/2013/02/irs-form-982-raises-questions-for-taxpayers-with-1099-cs/

Other helpful links:

http://www.irs.gov/pub/irs-pdf/p4681.pdf

WhyChat’s 1099 Knowledge:

http://whychat.5u.com/1099.html

Mortgage/Short Sale/Foreclosure 1099C’s:

http://creditboards.com/forums/index.php?showtopic=367027

http://www.irs.gov/uac/Home-Foreclosure-and-Debt-Cancellation

Disputing a 1099C:

http://creditboards.com/forums/index.php?showtopic=381499