IRS Changes Reporting Requirements

The Internal Revenue Service has published a notice of changes in the debt-forgiveness reporting requirements.

As originally written, in case of forgiven debt, the requirements included the reporting of interest, fees, and penalties, which in some cases were difficult, and in some cases impossible to reconstruct.

According to this most recent notice, financial institutions will no longer be penalized for failing to report debts forgiven in bankruptcy proceedings, debts erased by statute of limitations expiration, amounts other than the principal amount of a forgiven debt, and information pertaining to persons other than the primary debtor named in an account.

Copyright © 1994 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 5, No. 1, 8/94