IRS form 1099-C what is the timeframe when creditors must have it filed by?

I just received paperwork from the IRS about my tax return that was filed in 2006. Apparently, a 1099-C was filed in 2006 from a creditor for an account that had been settled with the that creditor in 2003 and the settlement letter states "settlement in full". How long does the creditor have to file a 1099-C for Debt Cancellation? The debt was cancelled in 2003 according to the settlement letter and my credit report. The IRS is now saying I owe them $1200 because I did not submit the information from the 1099-C on my 2006 tax return. Is it in writing somewhere that states the creditor has to file the 1099-C during the tax year the debt was written off or canceled? My question is how can the creditor, who settled with me in writing in 2003, file a 1099-C for the tax year of 2006? Doesn't the 2003 letter which states "settlement in full" mean that is the year of the cancellation of the debt and therefore that's the year the creditor should have filed the 1099-C?

IRS form 1099-C what is the timeframe when creditors must have it filed by?
This is a state law issue. The IRS merely requires the lender to issue the 1099-C in the year they write the money off of their books, not the year they stopped seeking money from you.





The 1099-C is notorious for showing up a few years later when your financial condition has improved and the tax bill will be bigger. (you can only exclude the money if you were in bankruptcy, insolvent or part of a 2007 foreclosure....)