What to Do If You Get a 1099-C for an Old Debt

So here’s my unofficial, plain English understanding of this. If the creditor hasn’t done anything to collect for 36 months, they need to send the taxpayer a 1099-C the following year. And my layman’s understanding of Dave’s situation is that, in Dave’s case, the lender waited too long to send him a 1099-C.

What’s a taxpayer to do?
Most people writing to me assume there is a form you can file with your tax return to let the IRS know that the 1099-C you got is incorrect. There’s not.

In an article about dealing with 1099-C forms on GetOutofDebt.org, CPA Jim Buttonowsuggests taxpayers who get an incorrect 1099-C form initiate a dispute by calling the IRS at and asking them to “initiate a Form 1099 complaint. The IRS will fill out form 4598, ‘Form W-2, 1098, or 1099 Not Received, Incorrect or Lost.’” According to the article, the creditor that issued the inaccurate 1099-C will be notified by the IRS of the dispute and asked to correct the form within 10 days. “The taxpayer will be sent a letter and a copy of the form that they can attach to their tax return in the event a corrected 1099-C is not received in time.”

When I asked Koontz about Form 4598, she could not find any recent references to it and believes it was proposed but not adopted. So it may be worth a try, but until we hear from taxpayers who have successfully used it, don’t count on it.

So what should you do? Koontz recommends the taxpayer include the amount reported on the 1099-C form on his or her tax return, then back it out and attach an explanation of why it is wrong. (Form 982 is the form you use when you believe you qualify for an exception or exclusion, but it’s not the form you use if you disagree with the filing of a 1099-C.) It’s a good idea to work with a tax professional to make sure you are handling it correctly.