Going through her papers I found documentation showing that she had loaned money to two different people for a considerable amount but can not find anything showing that they had ever paid her back. What can I do about this if anything? It isn’t right for someone to use someone like this. Any advice would be helpful. Thank you.
7 Answers
Helpful Newest
First Oldest
First
Just curious.
We would send 1099s to employees that quit owing money for advances or loans. I can't tell you how many times I found out that my employee was illegal, as long as I was withholding taxes and paying my share of ss/Medicare not one word about the invalid status, but pay them without withholding and within 2 weeks I was notified.
It never ceases to amaze me how much the IRS and State don't address as it comes up. You would think that at some point they would notify me that I need to handle unpaid employee loans differently, even my CPA hasn't said anything. Granted it has been a few years and maybe now they would. But now I wouldn't be lending an employee money.
Thank you for the information.
Another option that can be added as a follow up letter to the initial collection or dunning letters an atty sends out, is to after the initial 30 day notice letter is send out a 2nd letter that again asks for then to show that it was a debt & was repaid AND reads IF no response with documentation is sent back within 15 days then DPOA will file a 1099-Misc or a 1099-C (this really should be the attorney call as to which one is better for the lady’s tax situation) to them for 2019 taxes for the entire amount paid AND included is a W-9 & I-9 with stamped addressed envelope in 2nd follow up letter for them to do & return.
Their knowing that the IRS & state tax authority is getting a filing showing they have $$$$ totally taxable income just might be the scare needed to get what the lady needs in repayment; or establish that it’s a bad debt & a collection was attempted and it’s uncollectible with IRS filings and debt collection letters; or $ paid for services. I’d let the atty figure out what path to take. It kinda could establish that it’s not gifting but a true loan that’s unpaid or for services rendered so the $ is not under gifting transfer penalty. If this is a syzeable amount, we’ll wirth the atty costs as if she’s considered by Medicaid to have gifted it could have ineligible for eons which will be a costly problem to deal with.
If they refuse to fill out, sign & send w-9 & I-9 back..... not a problem. You can still file the 1099 to IRS with their names and last known address but you do a cover letter to IRS & state tax authority that the recipients refused to comply with the requested w-9 & I-9. IRS & state will more than likely dog them on taxes due.
Yeah total wicked.
But it’s amazing how the actuality of tax authority getting involved can make someone comply.
Iron fist in a Velvet glove or a veiled threat type of action by sending them W-9 & I-9. Yeah your rite, the i-9 could be excluded but it’s an added item to get their drivers licenses or passport info to have to send off for use by collections if that route is taken. They are both requests to be done, not mandated to be done. Your not sending them a subpoena. I’d bet they are thrown off totally when they get the first letter and the 2nd with the tax & I9 forms enclosed really get them taken aback. & it may get them to re-evaluate the situation and repay the debt. Voila! glove or veil worked!
As an aside on this, my first time as Executor was total surprise. It was an “aunt” of my dads. Actually 2nd wife of a cousin. She had appearance of $ & assets but reality was old marriages & debts with no neat probate done for any. FUN! Nephew was DPOA & got biz loans & other items for years prior. She & her attorney actually kept majority of her financials from him as she was competent. She did a codicil to her will few months before death naming me as Executrix & specifically excluding him as Executor & changed beneficiary of life insurance from him to instead be her named Estate. Before this, she called in his oldest loan & he was always with excuses on repayment which is why she did changes according to the atty, she was beyond peeved. She bought into a CCRC abt 4 mo. before her unexpected death & used up most of her actual cash (this is what she wanted loan repaid for). Accounts he was POD on were used for CCRC buy-in, so zeroed out & closed (so no alarms set off on this by him). Probate opened, I got appointed with dependent administration. Nephew was taken aback, livid actually and threatened to contest will, where was all the $$, I’m supposed to get her property, etc. He insisted that it wasn’t loans but actually payments to him or his biz for services. Atty sent him a letter with w-2s stating that it appeared there would be amended tax returns filed with IRS to reflect 1099-C Misc paid, so please fill out & return. Not another peep from him on contesting anything after that.
The implied threat of a 1099 is used a lot by debt collections to get folks to pay on debt. If you pay a penny, it gets debt clock reset for when Statute of limitations starts. But only the original creditor can issue the 1099, which most of those in debt don’t know. But as a implied veiled threat it might can do what you’d like to have happen, which is to repay a debt.
ADVERTISEMENT
I wouldn't settle for I paid her cash, that there are loan documents it only makes sense that they would have paid in a traceable way.
If they don't/won't provide proof that they paid her back, I would contact an attorney that can send demand notices. Not sure elder law attorneys would be the right choice, maybe a google search could direct you.
Yeah, people are low enough to target the vulnerable. It shows how cowardly they are, only bullies go after those people that can't fight back.