can they tax me???

[jhrebik]

What is the name of your state? TX

I had a company "cancel" a debt from hypothetical me. They gave me the option to pay it or they would file a 1099-MISC for the balance and send it to the IRS. What do they stand to gain from this? How do I lose? What if I don't send them my SSN?

 

[bigun]

To begin with, they should have your ss#. Is this the orginal creditor or, a collection agency?
A 1099C is a cancelation or forgiveness of debt. It means the company will continue collection activity nor sell the unsettled portion to a 3rd party collector.
Again, very odd that they don't have your ss#. Is this a legimate debt? When did you last pay the orginal creditor?

 

[jhrebik]

Ok, so this is not "me", but I am very close to the situation. A guy in TX was issued a check by a hotel mistakenly. When contacted to pay it back, he did not respond, but deposited the check in a business account. He had contracted a group to stay at a hotel and cancelled, but had provided a cc # to "guarantee" the group. His credit card could only be charged by the hotel (upon no response for 4 months) for $2000 out of the $3300 owed. No SSN was ever provided. He responded to the debt and threat of 1099, saying he intended to pay, and would not dispute the credit card payment, but did not pay the rest. Now what can become of him if he does not provide an SSN or respond to the debt?

 

[bigun]

well, I'm still confused about who is going to issue a 1099C but, a 1099C means they forgive or cancel the debt and won't try and sue him or continue to try and collect. The amoint of the 1099C is taxable income. His call on if he wishes to pay additional taxes or risk a lawsuit,etc.
He should be sure to get this deal in writing.

 

[jhrebik]

It is certainly in writing, and I believe within the legal guidelines. He is being issued the 1099 by the hotel. I just wonder what his prospects are if he declines to respond to the W9 and doesn't pay the debt.

 

[HelpUsPlease]

They will send in the 1099 without his tax ID number and with copies of the W-9 showing that he refused to provide his SSN/Tax-ID number (no response). The IRS will look up his SSN and apply the 1099 against his income taxes.