Lawsuit: ARS Falsely Threatens IRS Reporting

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ARS National Services, Inc. is on the receiving end of a proposed class action lawsuit claiming a collection letter it sent to a New Jersey consumer violated the Fair Debt Collection Practices Act. The letter allegedly contained a settlement offer and included the following information:

“Citibank, N.A./CITIMASTERCARD may report a discharge of indebtedness if required by applicable tax law. This reporting may have tax consequences to you.” 

The complaint argues this statement “is both false and deceptive” because it implies that any debt forgiveness will have tax reporting consequences. According to the suit, the letter fails to mention the many exceptions to IRS reporting requirements and omits information that would allow the least sophisticated consumer to correctly determine whether his or her acceptance of the settlement would be reported to the IRS.