The Rolling Jubilee debt elimination project is one of the best ideas to come out of the Occupy Wall Street movement. Yet some, most notably Yves Smith of Naked Capitalism, have raised concerns that eliminating debt in this fashion might create tax liabilities for the former debtors.
It turns out that the Rolling Jubilee folks have already dealt with this potential issue:
Q. When a Rolling Jubilee abolishes someone’s debt will this raise their taxes?
A. No. We double-checked this with the IRS and a project like this does not meet the requirements to file a 1099-C Cancellation of Debt form and will almost certainly have no effect on anyone’s taxes.
The lawyers I’ve talked to agree that this is largely a non-issue and can be easily dealt with should it arise (and the only way it would arise is if the IRS chose for some unimaginable reason to apply the United States tax code in a way which has never been done in the past).
(Crossposted to Mercury Rising.)
UPDATE: Here’s what Forbes writer Tim Worstall — who as he states is a capitalist and neoliberal “red in tooth and claw” and thus not someone who normally would agree with Occupy Wall Street on anything — has to say about the tax issue: Read the rest of this entry →