Internal Revenue Service No Longer Charging Tax on Debt from Defunct Colleges

[vc_row][vc_column][vc_column_text]Due to Revenue Procedures 2015-57, 2017-24, and 2018-39, the Internal Revenue Service stated that taxpayers, who received federal and private student loans for attending schools owned by CCI (Corinthian College, Inc.) and ACI (American Career Institutes, Inc.) and whose loans were discharged, do not have to realize gross income as a result of the debt discharge. In recent Revenue Procedures, the IRS has extended this relief to all taxpayers who took out federal and/or private student loans to attend nonprofit or for-profit colleges and whose federal loans were discharged under the Department of Education’s Defense to Repayment or Closed School discharge guidelines or where private loans were discharged based on settlements of certain types of legal issues. These taxpayers will not be forced to increase taxes for prior claimed credits or deductions attributable to the loans, and creditors will not be required to file information returns for the discharged debt. Revenue Procedure 2020-11.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][us_image image=”987″][/vc_column][/vc_row]