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Author: wtam Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: Previous employer 1099-misc for alleged debt Date: 5/9/2005 3:51 PM
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While at my former company I took a leave of absence and was offered to continue my health coverage under cobra by paying both the company and employer insurance portions but declined it, instead opting to have my spouse cover me under her company's health plan.

After returning from leave 6mo later, I received in the mail a bunch of coupons for making the insurance premium payments. since i had not opted for coverage, i threw them away.

2 years later, I am notified by some department that I owe the company $1500. I disputed that with them. I had notified them i didn't want the coverage, i sought and obtained alternative coverage, and i didn't make a single monthly payment which at least after the first month should have had them on notice that i wasn't taking coverage, and during that period i used my wife's plan for all medical issues and never once used the company's coverage they said i had (even though no premiums, employer or employee portion were ever paid).

Over the years, I would relate the entire episode to one corporate stiff or another, and it would go away for a bit, only to resurface. over time they also seemed to have lost the original reason/documentation for the alleged debt, as when i ask them to give me a specific accounting of why they are asking for it, i started getting different answers, like it was for flexible spending amounts i had reimbursed that i never paid in. They never provided me any detailed, month breakdown of what the alleged debt included, instead all they had was a lump sum of $1800+, which since it was going up over time I assume included some type of interest charge. Eventually, they turned it over to a collection agency. I provided the collection agency with a detailed account of what happened, and also the written correpondance with my former company. They took that documentation back to the company and told them they couldn't continue collection because there was a genuine dispute of fact with the company.

Now, to the tax question: 5 years later, I receive a 1099-misc in the mail from my former employer, that they have charged $1860 to me as misc income compensation. How do I go about disputing this a genuine income? If anything, I think they should have reported this as a bad debt and not miscellaneous income. Do I have to pay the tax and file with small claims court to get the money back? Or is there some place on my return that I can put an offsetting amount with an explanation to the IRS?

The practice of the company just reporting to the IRS an alleged debt as income is wrong.
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