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Forty four people received the following letter, sent out by Rolling Jubilee, a project of StrikeDebt. It informs them that a particular piece of medical debt each of them owed has gone "Poof!", all together retiring more than $100,000 in unpaid bills.

That's an average of $2273 per individual that is no longer owed, that no debt collector will be calling for, making threatening noises over the phone, or coming a callin', or perhaps even causing the individual to to go jail.

Original Creditor: xxxxxx
Patient ID: xxxxxx
Rolling Jubilee Acct : xxx
Original Balance: $xxx
Balance Due: $0.00

Dear Ms. Doe,

Season's Greetings from Strike Debt!

We write with good news: the above referenced account has been purchased by The
Rolling Jubilee Fund, a 501(c)(4) non-profit organization. The Rolling Jubilee Fund is a project of Strike Debt. The mission of this project is to buy and abolish personal debt. We believe that no one should have to go into debt for the basic things in our lives, like healthcare, housing, and education.

You no longer owe the balance of this debt. It is gone, a gift with no strings attached. You are no longer under any obligation to settle this account with the original creditor, the bill collector, or anyone else...

The actual amount of debt purchased was about $101,000, and the purchase price was $5,000.  So the stated 20:1 leveraging that Rolling Jubilee claimed was possible was actually exceeded!

The Rolling Jubilee has now raised almost 485,000, enough to retire almost $9,700,000 in debt, and they will soon hit $500,000 and $10,000,000 respectively. According to their last update

We are currently arranging the purchase of more medical debt, possibly worth several million dollars. This will be announced in late January or early February in tandem with a report on the role of debt in our dysfunctional healthcare system.
The letter also comes with a FAQ, in case the recipient believes this is too good to be true. (And let's face it, if you got such a letter, what would you think?)
What is Strike Debt?

Strike Debt is an offshoot of Occupy Wall Street. First started in New York City, but inspired by movements around the globe, Strike Debt now has affiliates across the country. We believe people should not go into debt for basic necessities like education, healthcare and housing...

What is Rolling Jubilee?

Rolling Jubilee is a project of Strike Debt. It is a bailout of the people by the people. Heres how it works: banks and other creditors sell debt for pennies on the dollar on a shadowy speculative market of debt buyers, who then turn around and try to collect the full amount from debtors. The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it.

Are There Any Strings Attached?

No, this is a gift. There are no expectations from the debtors whose debt we have abolished.

Do I Have to Pay Taxes on This Debt?
The Rolling Jubilee was created in consultation with a team of attorneys. They have thoroughly researched the tax implications and do not believe that beneficiaries are obligated to pay taxes on debts the Rolling Jubilee abolishes in this manner. It is the Rolling Jubilee's position that it is making a tax-free gift to the people whose debt it is abolishing. You shouldn't run into any issues with the IRS concerning this debt and can contact us in the unlikely event that you do.

Politicians you elected are now deciding whether to put you further in debt by raising your taxes and cutting your Social Security benefits. Contrast this to New York City Occupiers and their allies who have worked long and hard to make this project a reality, and with its success have succeeded in calling attention to the absurd burden debts are imposing on the least well off among us while benefiting those who are most well off. (Not to mention organizing a vast and efficient relief effort mitigating the effects of Hurricane Sandy while NGO's and the government fiddled.)

Perhaps we should move Congress to Zuccotti Park for the winter and let Occupiers pass some laws in Washington DC (even if many of them would shudder at the thought).

-----

Earlier diaries on the Rolling Jubilee:

Rolling Jubilee Hits $8,000,000 in Medical Debt to be Retired Uncollected. MORE UPDATES!

Rolling Jubilee Poised to Retire $9,000,000 in Medical Debt!

Originally posted to jpmassar on Tue Dec 18, 2012 at 10:44 AM PST.

Also republished by Occupy Wall Street, ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement, Progressive Policy Zone, and Dailykos Kossacks For Action.

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Comment Preferences

  •  I just love this idea, and donated once (10+ / 0-)

    I will make them another end-of-year donation when I do my big charity "spree."  There is no tax benefit to us to give to them, but the idea is worth it to me even without it.

    I'll consider it a political donation. :D

  •  I sincerely hope they have ways (0+ / 0-)

    of assisting the people they are helping with this program should the IRS decide to bring cases to the Tax Court.

    This is something very new and the IRS likes to go hard after potentially new ways to interpret existing law especially when it leads to lower tax collections.  A position taken by the group is essentially meaningless until it is adjudicated by a court.

    In addition, these people could run into a whole host of other penalties and problems.  Accountants may be unwilling to file such returns due to potential penalties they, themselves, may face.  Penalties for unreasonable positions is just additional penalty that may be asses to a tax payer.  I personally would not file a return for one of these people.  I have enough problems to worry about to take a chance against the IRS.

    I do wish you all good luck though.

    I must end each day with a dose of Top Comments. A TC diary is a must for developing the calmness I need to get the required eight hours of sleep. - cohenzee

    by cohenzee on Tue Dec 18, 2012 at 11:50:15 AM PST

    •  So you didn't even read the diary? (1+ / 0-)
      Recommended by:
      crankypatriot
      The Rolling Jubilee was created in consultation with a team of attorneys. They have thoroughly researched the tax implications and do not believe that beneficiaries are obligated to pay taxes on debts the Rolling Jubilee abolishes in this manner. It is the Rolling Jubilee's position that it is making a tax-free gift to the people whose debt it is abolishing. You shouldn't run into any issues with the IRS concerning this debt and can contact us in the unlikely event that you do.
      •  I read the diary. (1+ / 0-)
        Recommended by:
        FG

        I also know how the system works.

        1.  Rolling Jubilee has no standing to take positions on tax matters on what would be deemed reasonable.  That is what the Tax Court is for.  And believe me, the matter will end up there at some point.

        2.  The IRS has the ability to interpret the law as it sees fit.  It would then be up to the individual tax payer to prove in Tax Court that the IRS is wrong.  By no means an easy feat.

        3.  The IRS also has the ability to determine what constitutes reasonable proof to take a position.  This changes constantly in many areas.  Just in the last few years a number of changes have happened with charitable contributions & EITC.  And this year there will be additional standards that have to met regarding Education credits.  No one yet knows what the IRS will decide to implement for this because no one has done it.

        What Rolling Jubilee believes and what is actual are two different things.  Now I am not saying they won't get a favorable outcome; I am saying it's an unexplored area of tax law.  As a progressive and a tax accountant, I would not be willing to risk putting these people, who are already in bad financial situations, into worse ones.

        We saw what happened a few years ago when Oprah gave away cars to her audience.  

        I must end each day with a dose of Top Comments. A TC diary is a must for developing the calmness I need to get the required eight hours of sleep. - cohenzee

        by cohenzee on Tue Dec 18, 2012 at 12:28:10 PM PST

        [ Parent ]

        •  could you give us an idea of the risk in dollars? (0+ / 0-)

          a person, let's presume barely making ends meet, incurs an enormous debt, and then someone else pays that debt,

          the money the debtor no longer owes could be assessed as a gain to him, thus taxable?

          so, e.g., if i'm lucky enough to have my 20 thousand dollar debt paid the irs will be able to tax me with that as income?

          •  In theory. (0+ / 0-)

            So the worst that would happen is that you would owe some fraction of the $20,000 to the IRS, instead of $20,000 to the collection agency.  The amount would depend on your marginal tax rate.

            If you had $0 in income otherwise you probably still wouldn'
            t owe anything, or very little.

          •  Beginning with the additional (0+ / 0-)

            which would be subject to ordinary income tax rates plus underpayment penalties and interest.  The penalty rate is set a .5% of the underpayment.  Interest rates are set every quarter and are currently set at 3%, but may change.  In addition, the IRS has the right in some circumstances to add an additional penalty of 20% of the underpayment including if the understatement is substantial (more than 10% of the tax due or $5000).

            The information I presented here is for information purposes only and is not to be used for the basis of a tax position or for filing purposes.  Consult your tax professional for information specific to your situation.

            I must end each day with a dose of Top Comments. A TC diary is a must for developing the calmness I need to get the required eight hours of sleep. - cohenzee

            by cohenzee on Tue Dec 18, 2012 at 03:57:17 PM PST

            [ Parent ]

            •  Of course, the kind of people who have (0+ / 0-)

              crushing medical debt they aren't even trying to pay are not all that likely to have a tax professional to consult.  I do realize that's a boilerplate warning you're obliged to give us.

    •  It seems likely to me ... (0+ / 0-)

      ... that if the IRS does contest the nature of RJ's contributions as gifts, RJ's tax attorneys will take up the case for the forgiven debtors. I know that I'd contribute to their legal bills if they did that.

      If the IRS contests and RJ (or anyone who fights a tax bill on an RJ-forgiven debt) wins in tax court, the way is paved for more debt forgiveness.

      I feel like you, cohenzee, are implying that this isn't worth doing because RJ can't guarantee that the IRS will agree with their reading of the law. I feel very strongly that being able to put this to the test is an advantage RJ brings to the table.

  •  That is such good news (0+ / 0-)

    And it would be good to stick the men and women who lust for power into Zuccoti park for the winter.

    But my dream is really that we abolish the congress and senate as dependent upon the marble halls of the capital. I want to see us create a very transparent legislative body whose doings are not needed in dc, but in their home district or state. They can teleconference their meetings and those should be recorded for posterity (and in the case of hearings posted on CSPAN as it is now). People can tune in on the web to see what is happening (no more fly by night legislation) (The same should be true for states as well!) Bills should be posted for all to see and for all to comment. No more secrecy. If the legislation is sausage, everybody gets to see the entrails that go into the mix. If people are worried, they can go to the offices and see the congress critter for themselves. Now I suspect that we really need more of them (I don't know if we are adequately represented.)

    American Television is a vast sea of stupid. -xxdr zombiexx

    by glitterscale on Tue Dec 18, 2012 at 04:33:42 PM PST

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