1099 for outstanding debt?
January 5, 2009 10:28 AM Subscribe
1099 for outstanding debt ?? My company owes a vendor a few thousand dollars - since they have very little money and because they dispute the exact amount of the debt, they are stretching the issue out as long as possible and avoiding the debt collector's calls etc. Now the debt-collection company has left a message demanding a IRS form 1099 be submitted (to the IRS) to record the 'unearned income'.
posted by anonymous to law & government (6 answers total)
My understanding is that a 1099 is created/required to record payments to sub-contractors (so it's from the *payer* to the IRS about the *payee*). In this situation I can't quite work out what this request might be about ... by not paying a debt, I kinda see that the debtor has 'gained' that money. But what it is the use of that form in this instance ? I'm thinking it's some kinda of trick/device by the collection agent to sound scary or to get the company to formally record the amount of the debt (remember the exact amount is disputed). I can't really see how it helps them collect the money?
Any help please?