1099

My Mother Passed Away But Received 1099-C in Error

Written by Jim Buttonnow

Question:

Dear Steve,

My mother passed April of 2019 and Portfolio Recovery Associates LLC has sent her 3 1099-C forms with the Identifiable event date of 9/27/19 and Identifiable event code of G. The statute of limitations in South Carolina is 3 years and these debts are older than 10 years. I don’t believe the cancellation of Debt was 9/27/19 but done in previous years. How can I fight this?

Stevea

Answer:

Dear Stevea,

I didn’t have a clue on how to answer this so I asked my tax friend Jim Buttonow.

Here is what Jim said, “Steva needs to contact the company that issued the 1099-Cs and ask them to correct. Unfortunately, most of these companies have been reluctant to correct their forms. With box “G” selected on the 1099-C, the creditor has indicated that they have discontinued collecting and, as a result, issued the 1099-C. If the statute of limitations had expired, the creditor would have selected box “C.”

As a practical remedy, Steva should look to use an exclusion for the 1099-C (i.e. see Form 982 for exclusions including common exclusions such as insolvency or home acquisition indebtedness). If the 1099-C is corrected to a prior year, Steva would still have to report the 1099-C (and presumably use an exclusion) in the prior year.”

Jim

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About the author

Jim Buttonnow

Jim Buttonow, CPA/CITP, practices in the area of IRS and State tax controversy. He has more than 29 years of experience in IRS practice and procedure. Reach Jim at [email protected] or through his website www.buttonowcpa.com

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