My Dad has been irresponsible his entire life. Also he has been very secretive and would not allow anyone to know about his finances. He recently was determined to not have the capacity to manage his person or his finances.

My brother took on Dad’s guardianship of person. Elder care lawyer said since there was no money, not to get guardianship of finances.

Dad has been in a nursing home for three months, and Medicaid has been approved.

Now the bill collectors are on the hunt. He owes for payday loans, medical copays, ambulance rides, Publisher’s Clearing house.

His SSecurity check is going to the nursing home and Medicaid is paying the rest of his bill. My brother is getting Dad’s mail. Dad did not file with the IRS last year and they are sending notices. He only gets Social Security, but you still have to File.

I was his POA until my brother volunteered to get guardianship.

I am getting phone calls from people that want their money. My brother is getting calls from people that want paid.

Anyone else having this problem?

Follow through with the IRS - your brother as guardian will need to do this.  That does not mean your money is involved - just Dad's.  But don't ignore them - they do not go away.
Helpful Answer (2)
Reply to rovana

If the only income he received was social security, the IRS would be able to calculate his tax and wouldn't bother sending notices if it was zero, even if he didn't file a return.  I think igloo is right.  There must be one or more 1099-C's that were issued to him for forgiven debt that he ignored.  The IRS would assume that this income is 100% taxable, even though much, if not all, of it may excludable from tax if your father is considered insolvent.  But the IRS wouldn't know that if a return isn't filed.
Helpful Answer (1)
Reply to AlfredR

I agree, with brother as the guardian, you have no dog in this fight. Since this is all on your father, he is whose finances are damaged, not yours or your brothers. I do think the guardian should ask a cpa for help.

To the creditors who call, you can ask for their address to send a letter detailing that you are not to be contacted again, that he cannot pay, that he lives in a medicaid funded nursing home which takes 100% of his check. You can listen to DaveRamsey on the radio or online who gives this advice when asked. It's not your debt, don't pay it!
Helpful Answer (1)
Reply to surprise

Rovana is spot on that you cannot just ignore IRS or state tax division.

IRS as a super creditor can attach his SS or other retirement income. That he’s elderly and in a facility on Medicaid doesn’t matter.
For those on LTC Medicaid, this poses a problem as they are required to do a copay of their SS & any other monthly income to the facility. If IRS attaches say 1/3 of his SS, then he is in default of medicaid and facility has to notify Medicaid & facility can do a 3O Day Notice to move out. To keep him there it goes onto you to do a Private pay contract or you move him into your home. He’s toast on another facility as it’s in his Medicaid file. This is serious stuff, you don’t want to go there....

State can do do the same to any state paid retirement or can hold any tax refunds or rebates.

Regarding the other debts, unless you pay these, he will default and the creditors will write it off. Although that sounds terrific it will pose a problem later on. Any creditor owed over $600 who is not paid can file a 1099-C Cancellation of Debt for the amount in the tax year written off. Bigger creditors like CC, phone, utilities co, do these automaticcally. They can’t be avoided. IRS gets the 1099-C and dad gets a copy of it. The figure on the 1099-C can be the debt owed plus interest and fees. A 10k debt can morph to 16k.

1099-C is taxable income.
Yes, fully taxable income & reported to the IRS to the penny.

Dad needs to file taxes to possibly get beyond this. It is not imho a DIY Quickbook or TurboTax project. He needs a CPA or tax pro who understand doing IRS 1040 & 982 forms. I’d bet dad gets 1099-c for 2018 & 2019 tax filings as we’re already past mid year 2018. Your brother as he’s guardian has to take care of doing this. If bro has been legally appointed guardian, that guardianship is a court oversight process with regular filings. The judge is gonna be super SUPER peeved if Bro as guardian did not deal with this. If he’s guardian then legally none of this is your responsibility. You can share your thoughts & concerns but no es su problema.
Helpful Answer (4)
Reply to igloo572

Regarding the IRS...
A cpa can do and file the taxes and possibly negotiate reducing the penalty (not the interest, ouch) if anything is owed.
Also, depending on the letter sent, it could be the first step to an audit. So you definitely don't want to ignore letters from the IRS, for too long.

Helpful Answer (1)
Reply to sparkles87

Oh, tell the collectors that they are not to call you again. Tell them that u have nothing to do with Dads debt. Explain he is on Medicaid and they will be hearing from his attorney. Tell them if they call again, you will contact the FTC. They have strict laws on how collection agencies can collect and one no no is harassment. Tell your brother this too. Have nothing come to your homes. Set up a POBox for Dads mail. If u don't have caller ID get it. This way u can screen calls.
Helpful Answer (2)
Reply to JoAnn29

I agree. You nor your brother is responsible for Dads bills. Don't pay them! IRS, you need to prove Dad only received SS as income. No pension? SS is not taxable. So Dad would owe the IRS nothing. My Mom and MIL both got letters saying they no longer had to pay taxes because they didn't bring in enough added income. Not sure if their age and being widows had anything to do with it. Yes, a lawyer is needed.
Helpful Answer (0)
Reply to JoAnn29
rovana Jul 31, 2018
Whoa on the Social Security!  It may or may not be fully taxable depending on total income, also may vary from state to state where/if state income tax is considered.  Please don't encourage anyone to just decide they can stop filing.  They need to get that officially "nailed down" before they decide they can do that.  IRS is a supercreditor and can touch SS.  Please also note that although you may owe nothing, you may still have to file a return. (Well, really, how would IRS see that you owe nothing if you don't file?)
Your brother needs to consult an attorney. It may be recommended that he file bankruptcy on your dad’s behalf. An attorney can also tell him what to do about the IRS.
Helpful Answer (1)
Reply to anonymous439773

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