So you are reporting a business, and you had a subcontractor?
It doesn't sound like a 1099-C issue because you didn't loan money, you paid a contracted fee that was not earned because the ultimate customer did not keep the policy long enough. You should have deducted the chargebacks as business expenses in the year they occurred (because you had to repay the ultimate provider of the policy, right?), regardless of whether you got paid pack (and the pay back, if it ever comes, would be a new expense). So technically, I think you should amend your prior year return. If you took the charge backs this year, it would probably be a harmless error, but not technically correct in my opinion.
