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  1. #1
    Join Date
    Jan 2010
    Posts
    3

    Default Old Employer Says I Owe Them Money

    My question involves employment and labor law for the state of: Texas?

    I just received a 2009 MISC 1099 (other income) from an old employer for over $2,500.

    I was dumb founded since the last contact/employment with the company was late 2005/early 2006.

    I called their banking and compensation department:

    They said it was money I owed them. They mentioned about me getting letters/calls, but I haven't had any correspondence with them since 2006.

    I told them that they have my address (they sent to 1099 to it), and that I have not received anything else.

    I was told that I owed them money from 2005, but she couldn't tell me what for, and was going to call me back.

    The lady mentioned the issue already being sent to a collection agency??

    Here is my question? I do not think I owe them anything. I think they are scrambling for $$$. They are a financial services firm that seemed as if they could go under during the crisis.

    Is it possible for an employer to sell this so called 'owed money' to a collection agency? If they can, would this be reported to the credit agencies since my employer was never a creditor (No a loan)?

    If so, how can they be trying to 'write it off' by sending me MISC 1099 Income for 2009 (other income)? Obviously, this leaves me with a tax burden for 2009?

    It just all seems odd, and I do not know what to do, or whom to ask for help.

    I want to fight what ever is happening, and I will, if I am confident that this can't be report as bad debt (I am about to buy a home).

    Thank You For Your Time.

  2. #2
    Join Date
    Dec 2007
    Posts
    2,357

    Default Re: Help. Old Employer Says I Owe Them

    Wait a minute, you owed THEM money, so they sent you a 1099? Loan or debt of some kind that they forgave? That is the only thing I can think of that would trigger a taxable event at this late date. A 1099 is not a invoice and is not a notice of trying to collect anything.

    Something isn't making sense here.

  3. #3
    Join Date
    Jan 2010
    Posts
    3

    Default Re: Help. Old Employer Says I Owe Them

    Quote Quoting PattyPA
    View Post
    Wait a minute, you owed THEM money, so they sent you a 1099? Loan or debt of some kind that they forgave? That is the only thing I can think of that would trigger a taxable event at this late date. A 1099 is not a invoice and is not a notice of trying to collect anything.

    Something isn't making sense here.
    Tell me about it.

    I assume they are trying to write 'something' off. I do not know how a company handles an old expense/debt/charge-back.

    It seems odd to send me "income" in 09.

    I want to argue and fight; but they mentioned about it going to a collection agency, and I am just worried that this (what ever it is) is going to show up on my credit right when I am about to secure a mortgage.

    Thanks

  4. #4
    Join Date
    Jun 2009
    Location
    California
    Posts
    666

    Default Re: Help. Old Employer Says I Owe Them

    I don't understand them sending you a 1099 claiming that they paid you money that they did not. Like Patty, the only way that I can see that this would be valid would be if you legitimately owed them money and they wrote it off in 2009. You've got until April 15 to sort that out.

    An alleged debt being turned over to a collection agency, does not establish it as a valid debt no matter how agressive the agency may get in trying to collect.

    So, there are two possibilities here: (1) This is a valid debt that you thought you could ignore and it would go away, or (2) It is not a valid debt.

    If (1) you'd probably be best to settle it before life gets more complicated. If (2) I would send them a letter demanding proof of the debt and the details of how they calculated it. If they send something that you recognize as being a debt that you owe, again it would be best to settle it. If they provide nothing, don't pay. When contacted by the collection agency, ask them for the proof as above. If they provide no proof but a letter or form from the company stating that the money is owed, don't pay it. If they take you to court, they are going to have to show proof that the debt exists in order to collect.

    Assuming that this is correct, when you file your income tax include a letter to the IRS acknowledging the 1099 and informing them that it is incorrect; that you received no payments of any kind from this company in 2009.

  5. #5
    Join Date
    Jan 2010
    Posts
    3

    Default Re: Help. Old Employer Says I Owe Them

    Quote Quoting Scott67
    View Post
    I don't understand them sending you a 1099 claiming that they paid you money that they did not. Like Patty, the only way that I can see that this would be valid would be if you legitimately owed them money and they wrote it off in 2009. You've got until April 15 to sort that out.

    Thanks for your response.

    If there was some post employment charge-back (or something else show valid) them I am willing to settle that with them.

    I guess my real question is: Since they sent me a 1099 they are writing what ever it is; down in 2009. Meaning that what ever credit that might exist against my employment with them would be settled/forgiven. Correct or Incorrect? It will help with how I will proceed with this.

    My understanding that it is handled this way in the world of lending (credit, mortgages, etc.).

    Still very odd though.

    Thanks

  6. #6
    Join Date
    Jun 2009
    Location
    California
    Posts
    666

    Default Re: Help. Old Employer Says I Owe Them

    Taking a book write-off on a debt, does not mean that the debt is forgiven. If they later collect, they could issue a corrected 1099.

    -- so, if it is a valid debt and you try to ignore it, you could be liable for income tax on the $2,500 in 2009 and still potentially have them collect the full $2,500 plus a plethora of fees in the future.

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