AICPA Comments on IRS Changes in Cancellation of Debt Reporting
by Terri Eyden on
By Frank Byrt
The American Institute of CPAs (AICPA) said it supports the IRS' proposed guidance governing the reporting of the cancellation of debt by lenders, but asks for some changes.
"We support the Internal Revenue Service's efforts to address issues surrounding Form 1099-C, Cancellation of Debt," Jeffrey A. Porter, CPA, chair of the AICPA Tax Executive Committee, wrote in an April 1 letter to the IRS. "We strongly believe changes are needed to the filing requirements for Form 1099-C. Specifically, we suggest that IRS require lenders to issue Form 1099-C only upon the legal discharge of a debt, which will occur at the earlier of the expiration of the applicable statute of limitations or when all collection efforts by the lender or surrogate collection organizations have ceased."
The AICPA said "confusion and misreporting occur because the thirty-six-month nonpayment testing period can result in a Form 1099-C being issued several years after the debt is legally discharged."
Therefore, the AICPA has recommended that the IRS amend the applicable regulations so that a Form 1099-C is issued only for the year that a debt is legally discharged, which would solve the timing problem created by the thirty-six-month testing period.
The regulation applies to a discharge of indebtedness of $600 or more.
The AICPA also asked the IRS to collaborate with other government agencies involved with the oversight of credit card and other debts to ensure that the rules for legal discharge of debt are applied so that borrowers do not receive a Form 1099-C if the lender or third-party purchaser of the debt intends to continue collection efforts.
The comments to the IRS were developed by the AICPA Individual Income Taxation Technical Resource Panel and approved by the AICPA Tax Executive Committee.
You may like these other stories...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...
OECD calls for coordinated fight against corporate tax avoidanceDavid Jolly of the New York Times reported that dozens of countries with the most advanced economies have agreed on principles for concrete action to prevent...
Plan ahead before you buy some shares in a stock mutual fund near yearend, when the fund is about to pay a dividend. It might be better to wait until after the fund goes "ex-dividend," that is, wait until after the...
Upcoming CPE Webinars
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.