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Question: Sending clients to collections and reporting to IRS as income?

My company provides the pharmacy service to patients who had previously agreed to pay for the service not covered by insurance. They client does not pay and we are going to write off the debt and send them to collections. Can we report this to the IRS on a 1099, and which form (1099C?) Are there any pitfalls I should be aware of?

Answer: Whether or not to report a debt to the IRS is never optional. Either (a) you must report it and are required to report it, or (b) you must not report it.

When it is proper to report it, the correct form to use is 1099-C.

However, if you are sending the debt to collections, it is premature to report it now. You report it, on Form 1099-C, when it is canceled or forgiven, either of which means that a final decision has been made not to require the person to pay the debt, either because the statute of limitations has expired or because the expense of collecting the debt would exceed the amount that is likely to be collected.

Churches, service organizations and businesses seek help for Haiti

Catholic parishes to collect donations All Catholic parishes in the Diocese of Wilmington conducted a special collection at all Masses Saturday and Sunday, Jan. 16-17, to aid victims of the devastating earthquake that shook the island nation of Haiti Tuesday, Jan. 12. The Most Rev. W. Francis Malooly, bishop of the Diocese of Wilmington, said the money will go to assist the Catholic Relief …

John Turner

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