Question to fellow DU accountants and CPAs

[prole_for_peace]

A partner in the accounting firm for which I work INSISTS that one of my doctor clients can send a 1099 to patients that are not paying their bills. Another partner and I have looked and looked but we can't find anything like that. The first partner mentions a 1099-C but that is just for financial institutions, the po and people that lend a lot of money.

Of course the first partner (who is the MAIN bigshot partner) won't back down since he has told the client that this is possible.

Have any of you ever heard of such a thing? Personally I think he dreamed hearing that they could do that.

[hfojvt]

1. I looked but I cannot figure it out

http://www.irs.gov/pub/irs-pdf/i1099.pdf

It probably does not help that I am not a CPA. I cannot see how an unpaid medical bill would be considered 'income'. 1099-MISC mentions medical bills, but for amounts over $600. An upaid bill would be a negative number and thus less than $600.

[prole_for_peace]

4. some cancellations of debt are considered income by the irs

but i don't think that writing off bad debt is considered the same thing. and there are only certain types of orgs that can officially do "cancellation of debt"

[jakefrep]

2. Cancellation of debt...

...is technically income to the debtor, but I've never seen a doctor or other small business issue a 1099 to that effect.

[prole_for_peace]

3. that's what I said....

i have taken an informal office poll and no one else in the 50 + person firm has heard of this.

i really do think he dreamed it.

[Robb]

5. Never heard of that

But until last year I never heard of anyone 1099-ing their ex-wife for the settlement she received in the divorce. :)

[eyesroll]

6. You can do that? I thought all divorce-related transfers of funds were tax-free.

:shrug:

[Robb]

8. True that. But that doesn't mean

...a jerkwad can't try it, though.

[jakefrep]

7. At a seminar...

...I actually heard of someone who set up a child support trust, in order to make the recipient account for every penny.