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January 04, 2010



Allow me to ask a 1099C question, but first let me post the letter I will be mailing to a mortgage company:

Dear Mr. …..

A little over one year ago I received notice from the IRS that your company filed a 1099C (Cancellation of Debt) against me. The 1099C was dated March 13, 2006. This puts me at a severe tax liability, as I am sure you can imagine.

Since I never received any notice of the existence of the 1099C, penalties and interest have increased this debt to the IRS. It is curious to me that your company would send a 1099C to an address that your company foreclosed on in 2002. I can’t think of a more unlikely place to expect to find and notify me.

But wait…there’s more!

I received a summary from the IRS, and the 1099C filed by your company shows “bankruptcy not indicated”.

Let me get to the facts.

In 1998 my wife and I purchased a manufactured home on a private lot for $86,000.

In the year 2000 my wife and I filed for bankruptcy, and because I listed a near worthless piece of property (that I owned with two of my brothers), the Court ordered a Rule 341 Hearing with the Attorney for the Trustee of the Bankruptcy Court.

During the Rule 341 Hearing, the Attorney asked to see the title for the manufactured home, and immediately seized the title because Cendant Mortgage (that would be your company) failed to put their name on the title as a secured party.

Then the “fun” began.

Allow me to define the type of “fun” experienced. “Fun” is finding out that your wife hurt herself, and had to be hospitalized. “Fun” is losing your home and your marriage.

My wife asked me to leave in 2002, and I did. And I had no further contact except for the divorce proceedings, which lasted 15 minutes.

The Attorney for the Trustee of the Bankruptcy Court backed off in 2002 because the assets I claimed were near worthless. Cendant (your company) foreclosed and took possession of the property later in 2002.

I can hardly express my surprise when I found out that I had somehow gained over $100,000 in benefits from this disaster in my life (caused by Cendant’s non/malfeasance).

I am, in a gentlemanly way, asking that you review this case and contact the IRS. Your company undoubtedly received a tax break by submitting a false 1099C, and now you must accept that liability.

I am eager to put this period behind me, and I want to walk away.

I really don’t know the breadth of any liability your company may have (to the IRS and potentially to me), and I don’t want to find out. I want to go away.

You need to correct this. Please contact the IRS, and get them off my back.

Feel free to call me at anytime, at , if you wish to discuss this matter.


So...am I wrong here?

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    A reader should seek advice from an independent tax adviser with respect to the information on this blog based on the reader’s particular circumstances. This advice is intended to be general information and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS regarding the transaction or matters discussed here.
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