In December, I settled a $6,600 debt with Discover Card for $2,500 on my own, without a debt settlement agency. Although I received an acknowledgement letter stating that the debt was settled in full, I did not receive a 1099-C to file with my taxes.

Should I claim the $4,100 as income for last year and submit my own 1099? Or just skip it because if Discover Card didn't send me a form? My account with them was old (2002), and they had charged off my debt years earlier.

I don't want to screw the IRS, but I also don't want to pay more than I have to.

You can contact Discover to ask if they have sent a 1099C. If not, then you don't need to report. The 1099C is a fairly new thing.

Unless you meet the conditions to exclude this from income (bankruptcy, insolvency etc) then it is income irrespective of whether you received a 1099.

Agree with TaxSearcher. Unless bankruptcy is involved, the IRS considers forgiven debt as income which should be reported on Line #21 (Other Income) of Form 1040.

However, contact Discover FIRST! It is possible (in fact, I think it LIKELY) that Discover did not post the settlement to their books until after 31 December 2006, which means you will get the Form 1099C for next year's tax return.