1099-C and zero balance

[tatum4315]

B of A issued 1099-C for full amount of chargeoff from 2008. The credit reports still show  balance amount due of original $ 6500 debt. Is the OC  required to report zero balance due?

Thanks,

Tatum

[RobertEG]

A 1099C is notice of a creditor to both the consumer and IRS that a portion or all of the debt has been cancelled.

Settlement for less, for example, is a satisfaction of the debt, but with an IRS claim that the consumer pay taxes on the excused portion of the debt if it exceeds $600.

A "Charge Off" for accounting purposes removes a debt from a creditor's books as a receivable asset, but does not discharge the debt. Therefore, a charge off itself does not create a taxable event.  However, if the creditor sends a 1099C, its entire purpose is notification of cancellation of all or a portion of the debt, as identified in notice.

Cancellation of the debt would require an equivalent notification to the consumer's credit file that the debt, in whole or in part, has been cancelled.

If notified of its entire cancellation, the balance should be updated to report what it now is, $0.

[Shogun]

+1  If they sent you a 1099C then they determined that the debt was a uncollectable and filed for a loss with the IRS.  This means that they must report $0 balance owed.  If not then they are trying to double dip.