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Kaplan and Seager 1099-C Collection Letter Does Not Add Up

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Question:

Dear Steve,

Received what looks like a collection letter threatening to file a 1099-C if I don’t pay a debt that supposedly happened 17 YEARS AGO.

Firm is called Offices of Kaplan and Seager. Not much online about them, I’ve never had any other contact from them. They claim I had an account with Nextcard. According to online research this bank was shutdown by the federal government due to massive fraud about 13 years ago.

The letter doesn’t contain any required verbage that you usually see on a collection notice. It shows the Charge-Off Balance of $2,208.48; origination date of 12/31/1998; $3,538.41 interest that this company appears to have awarded to itself.

The 1099-C is part of this one page “Notice of Intent to File an IRS 1099-C” form. It has my name and address, Event Code C, but does not include my SS# or Creditors ID number.

How would you handle this?

Should I respond? If so, what would you recommend?

I uploaded a copy so you can review it. The back is blank.

Thank you for your time.

Mario

Answer:

Dear Mario,

It’s a collection attempt. They appear to significantly misrepresent the reality of the 1099-C and imply everyone may be subject to taxes owed. That is a gross oversimplification and not true in many cases. Read this and this.

Additionally I think you could make the argument to the IRS that if a 1099-C was issued in this specific example, it is in error. If they actually did report this debt I would suggest you contact the IRS to begin an 1099-C reporting error complaint.

Form 1099 Correction Process


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