|
Portfolio Recovery
Associates in Financial Trouble?
Here
we go again with the Creative
Accounting 1099C charge-offs.
This time around, it's Portfolio Recovery
Associates of Norfolk, Virginia.
Current Stock Quote for Portfolio
Is
Every 1099C a Potential
Lawsuit Against the
Collector Issuing It?
Just received some
interesting information
regarding the recent
article you ran
regarding all those
1099-C's Portfolio
Recovery Management has
been sending out on
time-barred debts they
can't collect on:
.According
to the WV General's
Office, "In
the case of a debt that
has been disputed and
cannot be proven a 1099c
is not a valid option
for a CA to file. By
filing the 1099c they
are saying that yes this
is that persons debt and
we can prove it is.
However if they cannot
validate they cannot
file the 1099c".
...they
suggested the recipient
of the 1099-C file a
complaint with our
State's AG office or
file a civil suit or
both.
(Email - our edits in
blue)
|
My mail box has been
flooded with consumer complaints from all across
America stating they have received IRS Form 1099-Cs
from Portfolio Recovery Associates (PRA) on debts
they purchased. Many claim these debts date back
into the mid 1990s and are no longer on their credit
reports; most are past State statutes for taking
legal actions and the majority appear to be far
beyond the seven year statute
for credit bureau
reporting. 
Portfolio
Recovery Associates, of Norfolk, VA is a
purchaser/seller/collector/ of junk debts purchased
in portfolios for pennies on the dollar. Upon
purchase, these debts are inflated to where they
attempt to collect on them from consumers at very
high profit margins.
|
NASDAQ
(GS: PRAA) showed
Tuesday’s close was 37.34 up from a high of
37.33. We are aware that the junk debt
buying industry is upside down right now
because prices have skyrocketed with so many
players getting involved in the scavenger
debt industry. The fact that PRA is flooding
consumer mailboxes with 1099-Cs that are
10-12 years old should be a concern to
anyone who is involved in this business. The
fact that a scavenger, junk debt buyer can
pay pennies for an old, worthless debt, then
convey to the IRS that they are entitled to
a tax break gives former Enron bookkeepers a
rush (wish I had thought of that?) with
anticipation of what could have been. |
Think about it.
PRA cannot legally collect the alleged debt, because
the debt is barred by the statute of limitations.
Their philosophy seems to be that if the consumer
won’t pay PRA, then the consumer should pay
someone-and that someone is the IRS-so PRA can reap
the benefit of a tax deduction? The question seems
to be whether *Creative
accounting allows
that PRA can deduct the amount of the debt as shown
on the 1099-C, and not the pennies on the dollar
that they actually paid for the worthless debt.
Contact a tax professional for advice
and assistance if you receive a 1099-C from PRA.
*http://en.wikipedia.org/wiki/Creative_accounting
- From Wikipedia, the free
encyclopedia
Creative accounting and earnings
management are
euphemisms referring to
accounting practices that may or may not follow
the letter of the rules of
standard accounting practices but certainly
deviate from the spirit of those rules. They are
characterized by excessive complication and the use
of novel ways of characterizing income, assets, or
liabilities. The terms "innovative" or "aggressive"
are also sometimes used.
The term as generally understood
refers to systematic
misrepresentation of the true
income and
assets of corporations or other organizations. "Creative
accounting" is at the root of a number of
accounting scandals, and many proposals for
accounting reform - usually centering on an
updated analysis of
capital and
factors of production that would correctly
reflect how value is added.
IS
ASSET ACCEPTANCE CORPORATION INVOLVED IN AN IRS
SCAM?
Asset
Acceptance Corporation (AAC) is not new to this
game. As bottom-feeder debt collectors they have
tried a lot of tricks and scams to separate
consumers from their money, among them; changing
dates of last activity on credit reports,
manufacturing bogus affidavits for court filings,
phony pleadings and even reports of phony payments
being made on accounts to change the activity dates.
This latest
apparent scam is new, by any definition and may
involve staggering amounts of money. AAC is
reportedly buying old, mostly worthless portfolios
for pennies on the dollar; They then mark them up at
inflated figures, then attempt to collect from
unsuspecting consumers. The problem with
bottom-feeders such as AAC is they NEVER have
anything invested in the accounts, other than the
money it took to purchase them. They are NOT
creditors, have NEVER extended any goods or
services, have no liability for accounts and their
assertions of being ‘valid’ claims, and may be
nothing more than smoke and mirrors.
Their latest
attempt appears to not only fleece the American
consumer but may be an attempt to scam the IRS.
It involves sending out IRS Form 1099-C forms to
consumers on accounts they failed to collect. The
legal questions to be addressed here include how can
you claim something you never had, for services you
never performed on accounts that never existed on
your books? Our emails state that consumers are
receiving IRS Form 1099-C, stating the debt is being
forgiven by AAC, but reported to the IRS as income.
Income? On what? They
did nothing, yet appear to be fleecing both the
American consumer and the IRS with these forms that
may give them huge tax breaks on their income.
Here is what
one expert had to say:
Great question. Let's take it to its logical,
and theoretical, extreme.
New company (let's say Exxon-Mobil) buys
paper, solely for the purpose of tax write-offs.
Buys $1 Billion in bad debt for $50,000, which might
be possible, if it is really old debt and even
discharged debt (though I don't know if it is legal
to 1099-C someone after discharge).
Sends out all 1099-C's, does not debt
collection at all and applies the $1 Billion to
shelter a portion of its $9 Billion windfall, when
actually paid only $50,000. I see an audit coming.
Think of the accounting entries.
Credit Charge off for Bad Debt $999,950,000
Credit Cash $50,000
IRS regulations allow for a Form 1099-C
to be issued on accounts that are uncollected,
however where does the smoke and mirrors end and
reality start on bottom feeders? If you receive a
1099-C form from AAC, you are urged to consult with
a professional tax advisor. By law, AAC must show a
zero balance on your credit files and of course,
cease all collection activity as that account fails
to exist once it has been reported to the IRS. Since
AAC can apparently deduct these windfalls off their
taxes, it makes me VERY happy for the new federal
accounting laws that hold them liable for their
accounting practices.
Congress enacted the Sarbanes-Oxley Act,
representing the biggest changes ever, to federal
securities laws. It resulted from the large
corporate financial scandals involving Enron,
WorldCom, Global Crossing and Arthur Andersen.
Effective in 2004, all publicly-traded
companies are required to submit an annual report of
the effectiveness of their internal accounting
controls to the SEC. AAC is publicly traded under
the symbol of: Nasdaq: AACC.
With their recent announcement of record profits,
one wonders how far reaching this may go. Is AAC
employing ENRON type accounting practices, is what
they are doing legal? Anyone receiving an IRS Form
1099-C and thinks it may be bogus is encouraged to
file a complaint with the IRS. Perhaps an audit of
AAC by the IRS can clarify this new and apparent
scam to fleece the IRS as well as the American
consumer.
|
