Purpose of Form

• According to the Internal Revenue Service, Form 1099-C is the “cancellation of debt” form. You will receive one of these forms from your bank if they cancel or forgive a debt that you owe them. The bank must file the form for any canceled debt in the amount of $600 or more. The Internal Revenue Service considers canceled debt as income; you receive the form so you can pay taxes on this income.
  
  

Getting Your 1099-C

• Generally, your bank should send out all 1099-C forms by January 31 of each year, although your bank may send your forms late. If you have moved, make sure the bank has your current address. If you think you are due a 1099-C, contact your bank to inquire about the status of the form before assuming they have refused to send it.
  
  

Reporting Requirements

• If you never receive a 1099-C, you should not assume that the bank did not send one to the IRS. The bank refusing to send your 1099-C doesn't mean you are not required to claim the canceled debt, except in certain mortgage-related instances. If you know the source of the canceled debt, use past statements or invoices to try to determine the amount of the exact amount. In the absence of a 1099-C, use this figure on your tax return.
  
  

Mortgage Forgiveness Debt Relief Act of 2007

• If you are expecting a 1099-C for a mortgage loan default, you may not be due one. According to NOLO, the Mortgage Forgiveness Debt Relief Act of 2007 provides tax relief for canceled or forgiven mortgage debt between 2007 through 2012. To qualify, the loan must have been on your primary residence or secured by your primary residence. This means that if the loan was for a vacation home, you do not qualify and are due a 1099-C.
  
  

Consequences of Not Reporting

• Unless you meet the qualifications under the Mortgage Forgiveness Debt Relief Act of 2007, discharged the debt in a Chapter 11 bankruptcy, were insolvent when the debt was forgiven or the forgiven debt is considered a gift, you must claim it on your taxes. Not doing so, even if you did not get the form, can result in a tax bill or audit notice from the IRS.