Apelles Sued Over Collection Letter’s Alleged Threat of ‘Tax Consequences’

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Apelles, LLC is on the receiving end of a proposed class action lawsuit that claims the defendant sent a collection letter that contained a misleading statement regarding the possible tax consequences of accepting a settlement offer.

According to the case, the defendant offered the plaintiff an option to settle her purported debt but warned that accepting the offer “may or may not result in tax consequences,” advising her to “consult your tax advisor if you have any questions.”

The case argues that IRS reporting requirements are complex and the defendant did not provide enough information for the plaintiff or a tax professional to determine whether the debt forgiveness should be reported. In particular, the suit claims the letter failed to distinguish between how much of the stated balance was principal and how much was interest.

“Even the most sophisticated tax professional cannot issue an opinion without this information,” the complaint states, “and it only acts to overshadow the settlement offer.”

The lawsuit argues that the defendant included the reference to tax consequences in order to threaten the plaintiff into paying the full amount of the debt instead of accepting the settlement offer.