NOTICE OF DEBT FORGIVENESS
, Former tenant
This letter is to notify you that you owe $________ for past due rent and/or other charges to ____________________ (previous landlord). You have 30 (thirty) days to pay said amount in full or contact me to make satisfactory arrangements for payment. If I have not received payment in full or other acceptable arrangements by the following date, __________, I will assume that it is intention not to pay amount due. After that date, I will cancel the debt and forgive the back rent and other charges.
Please be advised that pursuant to the INTERNAL REVENUE SERVICE code, that when indebtedness is forgiven, it becomes classified as income and taxes will be due them from you on this amount. Cancellation of debt must be reported to the IRS by the one whose debt is being cancelled. It would, therefore, be necessary for you to include said cancellation of income on your tax return so that you'll be able to pay the tax due without incurring any interest and penalties for failure to report said income.
I will be submitting a 1099 to the INTERNAL REVENUE SERVICE in your name for $ __________. I will mail this form and officially forgive the debt on the following date __________. Once this form is received, it may trigger a letter to you from the IRS and possibly a complete tax audit. This letter is being sent however, in hopes that you will pay the amount due or set up an acceptable payment plan, so that the IRS will not have to be contacted on your regard.
Be advised as well that if you are on any form of public assistance, this classification of income will also be reported to all public assistance programs that you may be participating in, and this might cause you to lose eligibility in the program or reduce monthly payments to you.
Hopefully you will pay the debt so that a 1099 will not have to be filed. To make payment arrangements , please contact me by this date, __________. The phone number to call is __________ or send the amount due to me to the following address _______________________________________ .
Thank you for your cooperation,