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Do I need to sue before writing off a debt?

Bookkeeping & accounting basics

No. You need to show the debt is worthless, and reasonable collection efforts, documented correspondence, demands, a decision that further pursuit is not worth the cost, generally suffice.

Litigation strengthens the case but is not required, and the IRS does not expect you to spend more chasing a debt than it is worth.

We handle this for founders running US companies.

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Check your EIN confirmation letter (CP 575) first. If that is gone, look at a previously filed tax return, a business bank account application, or any 1099 you have issued. Your bank or your payroll provider will also have it on file.

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