The IRS has issued final regulations TD 9793 that eliminates the “36 month” non-payment testing period for certain lenders to issue Forms 1099C. The IRS believes that this rule had created confusion regarding the proper reporting of cancellation of debt income.

A taxpayer has cancellation of debt income generally upon the occurrence of the first “identifiable event” where it is clear that the lender has no intention of attempting to enforce collection on the debt and the borrower has no intention to repay the debt.