Tax Year Prior to 2020: Can a creditor send a 1099c 3 years after the statute limitations expired?

Based on the information below, the creditor may not have cancelled the debt at that time.  If the Form 1099C is dated 2017, this would indicate the debt was not cancelled until 2017, which means it is required to be included on your tax return.  If the Form 1099C has a date for a prior year, then it should be included on that tax return.  

If you have documentation that the debt was cancelled in an earlier year, it was included on your tax return for the year of cancellation and a document was never received by the creditor, you can retain those records with your tax return as proof.  If it was part of bankruptcy, and therefore not required to be taxable income, also retain those records.  In either of these scenarios you can enter the income, then enter a negative miscellaneous income to cancel it out.

If it was never reported as cancelled debt and it was not part of bankruptcy, then it must be included in your income tax return for the year shown on the Form 1099C.

Filing Requirements for Form 1099C: In accordance with Internal Revenue Code (“IRC”) §6050P, discharges of indebtedness of $600 or more during any calendar year, must be reported to the Internal Revenue Service (“IRS”) on Form 1099-C. Entities that must file Form 1099-C include financial institutions, credit unions, the Federal Deposit Insurance Corporation or any organization whose significant trade or business is the lending of money. However, the IRC does not state that these are the only entities that can file such returns. IRS Service Center Advice (SCA) 1998-020 states that “an individual or entity not required to file a Form 1099-C under §6050P of the IRC may nevertheless voluntarily file the form.” Such reporting may encourage voluntary tax compliance and proper gross income inclusions now and in the future.

Debt is considered canceled or discharged on either an identifiable date that an event occurs or the date of actual discharge, if earlier.

The following are identifiable event codes that would be utilized for reporting in box 6 of Form 1099-C:

• A – Discharge in Bankruptcy under Title 11.
• B – Judicial debt relief which makes a debt unenforceable in receivership.
• C – Statute of limitations or expiration of deficiency period.
• D – Foreclosure election.
• E – Debt relief from probate or similar proceeding.
• F – By agreement between creditor and debtor (e.g. short sale).
• G – Decision or policy to discontinue collection.
• H – Expiration of nonpayment testing period (applies only to entities who must
  file).
• I – Other actual discharge before identifiable event.

You can add a comment if you have more questions.

I have a 2019 1099c. Line 6 has the letter H. Does this mean I owe taxes on the debt that was discharged?