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Ask Dwayne B. Your Own Question
Dwayne B.
Dwayne B., Attorney
Category: Legal
Satisfied Customers: 32592
Experience:  Began practicing law in 1992
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My husband and I received an incentive check for the short

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My husband and I received an incentive check for the short sale of our home in 2011. When it was time to file taxes in 2012 and I did not get a tax form from them I called. They asked me a series of questions and said no form was needed is was tax free. I got a letter today that stated they had made a mistake and they would be sending us as well as the IRS a Form 1099 MISC. This means I will have to amend my taxes and owe big time. The money is already spent. Is there any legal action I can take against their costly mistake.

JD 1992 :

Hello, and thank you for contacting Just Answer. I am an expert here and I look forward to assisting you today.

JD 1992 :

No, unfortunately there is no legal action to be taken. Even though they told you incorrect information that mistake did not cause you to accept the money or incur the taxes.

Customer:

So they can just give false information that will affect how much I owe by like 10,000 and there is nothing I can do.

JD 1992 :

Not if they gave you the information after you had already received the check and kept it. They had no legal duty to provide "advice" as to whether or not the money was taxable.

JD 1992 :

It would be a different matter if you had based a decision to accept the money on their advice.

Customer:

We called at tax time to ask why we had not received a form from them .They asked a series of questions like ( was the home your primary residence, and did you live there for more than two years) After we answer the question they said they had no forms and that nothing was reported to the IRS . I asked if it was tax free and CHASE said YES.

JD 1992 :

I understand your facts.

Customer:

It was 30,000 incentive we used it when we moved . That is going to be like 10,000

Customer:

CRAP

JD 1992 :

Under the law, you didn't suffer any damages because of their misinformation. You would have owed the taxes whether they told you correctly or not.

JD 1992 :

I'm not saying what they did was right or fair, it just isn't something you can sue over.

Customer:

Yes but their ill preparation will surely cost me late fee and penaltys wouldent you agree . I dont have 10 grand at my fingertips

JD 1992 :

It shouldn't. However, if there are fees associated with their failure to send the 1099 then you could sue them for that. I have never seen the IRS penalize a person for filing correctly and then having to amend because of someone else's mistake.

JD 1992 :

They may penalize them but they shouldn't penalize you.

Customer:

They will charge me interest if I have to make a payment plan . That takes more than 6 months.

JD 1992 :

They may do that, but I don't think you would be successful in a lawsuit based on the interest. Possibly, but not likely.

Customer:

I just worry that interest on 10K will add up fast if I'm only paying like 2 or 3 hundred a month

JD 1992 :

It could. You may consider suing them in small claims court for the interest but you're going to spend more than that on a lawyer so small claims court would be the way to go if you decide to pursue it.

Customer:

OK thank you for you time.

JD 1992 :

You're very welcome. I wish I had better news for you.

JD 1992 :

Best wishes to you. Please don't forget to leave a Positive Rating so I get credit for my work.

JD 1992 :

Anything else I can assist with?

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