10-2681 Cavoto v. Hayes

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Tax
Filing fraudulent information return

26 U.S.C. 7434(a) does not create a private cause of action for filing a false cancellation of indebtedness.
“Cavoto takes issue with the district court’s decision that he was on the hook for the full $30,000, and he thus implies that the Form 1099-C was indeed fraudulent. But, as it turns out, whether or not the Form 1099-C was misleading is irrelevant. The remedy created by § 7434 is limited in scope. The types of false ‘information returns’ for which an injured taxpayer may recover are limited to the nine listed in 26 U.S.C. § 6724(d)(1)(A). See 26 U.S.C. § 7434(f); 34 AM. JUR. 2D Federal Taxation ¶ 71735 (2010); 20A FEDERAL PROCEDURE, LAWYERS EDITION § 48:1492 n.1 (2009). Those nine do not include returns relating to the cancellation of indebtedness, i.e., a Form 1099-C. This limitation was overlooked by the district court, which should have dismissed Cavoto’s lawsuit outright under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.”

Affirmed.

10-2681 Cavoto v. Hayes

Appeal from the United States District Court for the Northern District of Illinois, Coar, J., Per Curiam.

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