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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Is it legal for a card company (Capital) to file a 1099c on

Customer Question

Is it legal for a card company (Capital) to file a 1099c on debts which is already cancel due to being a time bar debt? This account had automatically cancel due to time expired in June 2011. This account was held against me for more than 7 years as a charge off on my credit reports. The account went delinquent in 8/2004 and charged off thereafter. As according to Texas law an account cannot be held against a person for more than 7 years starting when the date the account first went delinquent.
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

Lev :

Hi and welcome to Just Answer!
The credit card company is required to issue 1099C form when the debt is cancelled or becomes not collectible.
However - if the debt became not collectible in 2011 because the statute of limitation run out - the form 1099C should be issued for 2011.

Lev :

If you received form 1099C for 2012 - in this case it is not correct. I suggest to contact the credit card company asking to correct the form.

JACUSTOMER-20swzpva- :

So, you are telling me a 1099c could be issued for debt 10 to 20 years old?

Lev :

The form 1099C should be issued in the year when the debt became not collectible due to the statute of limitation.
The credit card company may not decide when to issue form 1099c - but it is required to issue the form in the year the debt became not collectible - regardless how old the debt is.
If the debt became not collectible in 2011 - the form 1099C should be issued for 2011.

Lev :

So - if your reporting on form 1099C is not correct - you need to contact the sender - the credit card company - asking for correction. If they refuse - you will contact the IRS and explain your situation.

Lev :

Please let me know what are your expectations? What do you expect the credit company to report?

Expert:  Lev replied 3 years ago.
Just in case you were not able to use the chat - I am switching to Q&A mode and posting the answer below.
Please feel free to communicate if you need any clarification or have other tax related issues.

The credit card company is required to issue 1099C form when the debt is canceled or becomes not collectible.
However - the credit card company may not decide when they want to issue the form. If the debt became not collectible in 2011 because the statute of limitation run out - the form 1099C should be issued for 2011 - and not for 2012.

The form 1099C should be issued in the year when the debt became not collectible due to the statute of limitation.
The credit card company may not decide when to issue form 1099c - but it is required to issue the form in the year the debt became not collectible - regardless how old the debt is.
Let me know if you need any clarification this matter.

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