Warning: Don't Be Scammed Into Overpaying Your Taxes


There is a new and very frightening scam out there to get you to pay even more of your hard earned dollars to the IRS.  Unfortunately, I have learned of the reality of this scam because I’m the recipient of a letter from the IRS demanding I pay $2, 226 additional taxes based on an inaccurate Schedule 1099-C filed from a less than reputable company.

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If you’re facing tax headaches because you received a 1099-C for cancellation of debt income, you are not alone. An estimated 6.3 million of those forms have gone out to taxpayers and they are creating all sorts of confusion. It’s a big mess, and the IRS isn’t exactly handing taxpayers a broom.

Thousands of tax payers are receiving similar demand letters and have no idea how to handle them.  The Federal Trade Commission even had to create a new publication, Time-Barred Debts: Understanding Your Rights When it Comes to Old Debt to help those involved in this scam.  Less than upright Debt-Collection companies are selling junk debts to big corporations, who are in turn issuing Schedule C 1099 write offs that are then reported as income for the taxpayer.

When I called Asset Acceptance, LLC which is the company listed on the payment demand notice from the IRS, they could not tell me what the debt was for because they had purchased the debt. They could tell me that it was from 1991!  So I was immediately relieved since even if it was something of mine from the past, the statute of limitations would surely apply and we’re all set.  Not so fast, it is the IRS we are talking about.  The burden of proof lies on the taxpayer.  I’m supposed to deal with this company to get a revision, 4 phone calls later to the company and only getting voicemails with no return calls, not likely to solve the problem. Add to that the $25.5 Million dollar settlement this company was recently asked to pay the FTC for consumer deception and it is obviously not easy to work with them.

Next step, “simply fill out form IRS.gov 982″ according to many of the tax experts.  However, this form has even the tax pros scratching their heads and it doesn’t fix the problem at hand.  I contacted a tax attorney and it would be $600 initial consultation fee to discuss this matter further.  I did find some good advice on this issue here:


Many people are so afraid of standing up to the IRS that they will simply pay taxes they don’t owe for fear of an audit.  I’m certainly not writing a check on something I don’t owe but still have to figure out how to make it clear to the IRS that I don’t in fact owe them.  This will have an impact on my refund when I file taxes in the next 2 weeks and we know the problem won’t be resolved quickly.  Life is always full of surprises and we need to find ways to stick together and help one another out.

Have you or anyone you know received similar notices?

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