Consumer complaint received 2024-11-07 00:00:00
Product: Debt collection — Credit card debt
Issue: Written notification about debt — Didn't receive enough information to verify debt
Company: SOFI TECHNOLOGIES, INC.
State: GA

Complaint narrative:
Consumer Financial Protection Bureau XXXX XXXX XXXX XXXX XXXX XXXX XXXX  Request for Clarification Regarding Issuance of 1099-C for Transferred Debt Original Creditor : Sofi Bank , N.A. 
Current Servicer/Owner : XXXX XXXX XXXX XXXX XXXX Dear CFPB, I am writing to formally request assistance regarding a lack of clarity and potential compliance issues surrounding the reporting and tax obligations for a charged-off debt originally held by Sofi Bank, N.A., which , per Sofis communication, has been transferred to XXXX XXXX XXXX, servicing on behalf of XXXX XXXX XXXX. Sofi has confirmed that it charged off the debt but has declined to issue a 1099-C, citing XXXX as the current owner of the debt. 

Upon inquiring with Sofi about its issuance of a 1099-C to reflect this charge-off, Sofi directed me to XXXX, claiming that it no longer holds or owns the debt. Resurgent, however, has not provided any indication that it will issue a 1099-C or otherwise fulfill the tax-reporting obligations related to this transferred, charged-off debt.

This ambiguity creates a situation of potential non-compliance with IRS regulations and consumer protection laws regarding tax reporting and proper debt ownership transparency. It is imperative to clarify : 1. Who bears the legal responsibility for issuing the 1099-C form following a charge-off and transfer of ownership, specifically when the original creditor ( Sofi ) declines responsibility post-transfer. 
2. Whether XXXX XXXX XXXX, as the alleged current servicer/owner, is obligated under federal law to fulfill tax-reporting duties for a debt it acquired, given Sofis assertion of no further obligation.

When it comes to creditor and debt collector obligations for issuing a Form 1099-C and compliance with tax reporting, the law and precedents are complex, as they intersect between IRS tax requirements and consumer debt obligations under the Fair Debt Collection Practices Act ( FDCPA ). For instance : 1. IRS Reporting Requirements for 1099-C : 26 U.S.C. 6050P : The Internal Revenue Code mandates that a debt discharge of {$600.00} or more must be reported to the IRS on a Form 1099-C. Specifically, this obligation typically falls on the creditor who discharged the debt, as clarified by IRS regulations.

26 CFR 1.6050P-1 : This regulation provides further details on the reporting obligations, noting that entities involved in the cancellation of debt, such as financial institutions, must issue a 1099-C when they have discharged the debt or deemed it uncollectible. In cases of transfers or sales, the responsibility can become ambiguous and requires clear assignment between parties.

IRS Publication 4681 : This publication helps clarify which party ( original creditor vs. subsequent debt holder ) should issue the 1099-C in cases of discharged debt and is referenced by the IRS for consumer rights in debt cancellation.

2. Debt Validation and Consumer Rights : 15 U.S.C. 1692g : Under the FDCPA, debt collectors are required to provide debt validation upon a consumers request. When ownership of a debt changes hands, the consumer is entitled to verification of ownership, so they have the correct documentation about who holds the debt and therefore should issue the 1099-C. 
XXXX XXXX XXXX, XXXX XXXX XXXX ( XXXX XXXX XXXX ) : This case established that the debt collector must provide validation of the debt, which includes information that the consumer needs to ensure they are working with the correct entity.

The issuance of Form 1099-C has significant tax implications for me as a consumer, and I am concerned about the potential for reporting inaccuracies or omissions. To that end, I respectfully request the Bureau 's intervention to determine which entity holds responsibility under IRS and consumer protection regulations for issuing the required documentation in this case.

Thank you for your attention to this matter. Should you require any further information, please do not hesitate to contact me.

Company response to consumer: Closed with explanation