Q: Bank of America refuses to send me a 1099-C for tax year 2022 even though Statute of Limitations has expired June 2022.
IRS regulations 1.6050P-1(b)(2)(i)(F) and (G) are very clear that if a debt has reached the statute of limitations it is one of the trigger items (Identifiable event) that require a 1099-C Cancellation of Debt be sent out. It further states that this section applies whether or not an an actual discharge of indebtedness occurred.
Bank of America claims from what I can tell that they don't have to obey this law and they state the following.
FROM BANK OF AMERICA: "However In accordance with the tax law, Bank of America is required to report to the IRS when we cancel a portion of a client’s debt due to a charge off or settlement. When an account is charged off, the debt is still valid. We have confirmed no 1099-C’s documents have been issued for your accounts as we are still attempting to collect on the debt."
Apparently they seem to think this IRS regulations 1.6050P-1(b)(2)(i)(F) and (G) is optional. Is that true that they can blow off sending out a 1099-C?
A:
The IRS regulation 1.6050P-1(b)(2)(i)(F) and (G) does stipulate that certain identifiable events, such as the expiration of the statute of limitations on a debt, can trigger the requirement for a creditor to issue a 1099-C, Cancellation of Debt form. However, the application of this regulation can sometimes be subject to the creditor's interpretation and internal policies.
Bank of America's stance, as you've described, suggests they view the debt as still valid and are continuing efforts to collect, which may be why they have not issued a 1099-C. This position indicates they might not consider the expiration of the statute of limitations as an 'identifiable event' necessitating the issuance of a 1099-C for your case.
In such a scenario, it's advisable to consult directly with a tax professional or a legal advisor experienced in tax law. They can provide specific guidance based on the details of your situation and may suggest steps you can take, such as contacting the IRS for clarification or assistance.
Remember, tax laws can be complex, and individual cases may have nuances that affect how these laws are applied. Professional advice can help ensure that your interests are adequately represented and that you are complying with your tax obligations.
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