On a repossion can the IRS collect for the bank?

Say for example you buy a car on credit from a dealership. On paper, the bank paid for your car so that makes you a debtor and the bank a creditor. You will then be subject to settle the debt by paying back the bank since they supplied the funds that allowed you to purchase the car. Failure to do so would allow the bank to repossess your car and sell it in order to wipe away the debt. This would ultimately make you lose your car and take a significant hit to your credit. In this case, the IRS cannot collect for the bank, since the bank took back the car to settle the debt. In the case where certain circumstances made it impossible for you to pay back the debt the bank may write off the debt as forgiven, which allows the IRS the opportunity to collect tax. The tax would be administered to forgiven debt since it would be seen as taxable income.

Find Accountants in Orange County

Darryl Carter & Assoc Inc
111 Pacifica Ste 150
Irvine, CA 92618
Francisco Aguillon
801 S Main St
Santa Ana, CA 92701
Melgar Bookkeeping & Tax Service
130 N Fairview Ave Ste F
SANTA ANA, CA 92703
Jrv Income Tax Service
1617 E 1st St 1
SANTA ANA, CA 92701
Fiesta Auto Insurance
105 E Ball Rd
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Dag C Saxlund Cpa & Accountancy Cor
34177 Pacific Coast Hwy 105
DANA POINT, CA 92629