By Matthew M. Young, Attorney
With tax season upon us, I want to remind credit unions of their obligation to timely file form 1099-Cs in cases of certain satisfied and charged off debts. A credit union that forgives or writes off $600 or more of a debt’s principal, not including amounts attributable to interest or fees, must send a Form 1099-C at the end of the tax year. A Form 1099-C should generally occur the year an identifiable event occurs. An explanation of an “identifiable event” along with greater filing instructions and exceptions to filing 1099-Cs are available in the attached link to the IRS’s website below. Penalties for non-compliance can be very steep (up to $50 per error with caps up to $250,000.)
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