Sec.  1.1950   Reporting discharged debts to the Internal Revenue Service.

   (a) In accordance with applicable provisions of the Internal Revenue Code
   and implementing regulations (26 U.S.C. 6050P; 26 CFR 1.6050P–1), when the
   Commission discharges a debt for less than the full value of the
   indebtedness, it will report the outstanding balance discharged, not
   including interest, to the Internal Revenue Service, using IRS Form 1099–C
   or any other form prescribed by the Service, when:

   (1) The principle amount of the debt not in dispute is $600 or more; and

   (2) The obligation has not been discharged in a bankruptcy proceeding; and

   (3) The obligation is no longer collectible either because the time limit in
   the applicable statute for enforcing collection expired during the tax year,
   or because during the year a formal compromise agreement was reached in
   which the debtor was legally discharged of all or a portion of the
   obligation.

   (b) The Treasury will prepare the Form 1099–C for those debts transferred to
   Treasury for collection and deemed uncollectible.