My wife and I claim Chap 13 BK in 2003 with scheduled payments. We received a 1099c form from a Credit Union for a cancelation of dept of the balance owed after the sale of a vehicle that was surrendered. We claimed the amount left over from the sale of the vehicle on our taxes (line 21 I believe) and paid taxes on unearned income on the amount after receiving a 1099c form from the CU. The next year, we decided to cancel the 13 and settle with all our debtors ourselves instead of paying a middle man (so to speak) money to pay our debtors for us. 4 years later we get a letter from an attorney stating he was trying to collect the amount that we still owed. After showing him the 1099c form from the CU and a copy of our tax papers showing that we had claim the 1099c as unearned income, he stated that we no longer owed the CU any money. Now yesterday I received a new 1099c for (4 years later) that states the amount of canceled debt is now $0.00 instead of the amount that we already paid taxes on 4 years ago.

Is this legal? Can anyone help with any comments here.

Thanks,

One confused Person

Is the Form 1099C dated for 2003? If so, you could technically amend your 2003 return to reflect the reduced amount and get a refund on the tax you paid EXCEPT for the fact that the 3-year statute of limitations to claim refunds has expired.

You MAY be able to amend the return and claim the refund because of the recent change of circumstance, in that you filed and paid taxes based on the available information, and the new information changed the facts.

How much was the original 1099C for?