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this message is brought to you by the Taxpayer Advocate service your voice at the IRS hello Im Nina Olson the National Taxpayer Advocate we in the Taxpayer Advocate service are bringing you a series of consumer tax tips to help you understand some important tax issues you may be facing this series focuses on the issue of cancellation of debt if you have lost your home to foreclosure or had your credit card balances written off or your car repossessed you need to know about the tax consequences of cancellation of debt income if youve received a form 1099 C cancellation of debt in the mail please dont ignore it and hope the problem will go away the lender sends this form to you and the IRS reporting the amount of cancelled debt income you may not have to pay taxes on some or all of the cancelled debt but you have to tell the IRS why your cancelled debt income is not taxable or else the IRS will treat it as taxable income to ask the IRS to exclude this amount from your income you need