IRS gives some relief to lenders and debtors on debt cancellation income. Lenders use Form 1099-C to report income from discharge of indebtedness. For years, IRS regulations have listed eight events that trigger information reporting. IRS is now scrapping one of the events…the requirement that lenders send the form to debtors when no payments have been received on the debt within 36 months. This rule has led to mismatches with taxpayers and has wasted agency resources because the trigger for filing the form isn’t based on the actual discharge of the debt. The final regulations apply to 1099-C forms required to be filed after Dec. 31, 2016.