ECPRS Filing Pending for Defauilted Loan

[austin3515]

Recordkeeper sent out a 1099-R for a 2015 loan default. It turns out the sponsor made a mistake on loan payments and now we are doing an EPCRS filing to correct.

What are the participants options with respect to his 2015 tax return?

Can he file it now?

Should he include an explanation that an IRS application is pending?

I assume the IRS will respond that income from a 1099 is missing, at which point we would resend the same explanation?

I assume this would delay any refund for the participant?

[jpod]

It seems to me his best bet is to put his 1040 on maximum extension and perhaps there will be a favorable compliance statement and a corrected 1099-R by the time he must file.

Short of that, I think the choices are obvious. 1. Pay the tax reported on the 1099-R with the hope and expectation that he can file an amended 1040 and secure a refund (with interest) once the corrected 1099-R is filed. 2. Ignore the amount reported on the 1099-R, with an explanation attached to minimize the risk of penalties. I have no idea if this will hold up his refund or lead to months of aggravation, but I would bet "yes" to both.