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August 1, 2008

Servicemembers Civil Relief Act

Form 1099-C Not Required When Motor Vehicle Lease Is Terminated Under Servicemembers Civil Relief Act

When service members terminate motor vehicle leases under the Servicemembers Civil Relief Act, lessors are not required to issue Form 1099-C, Cancellation of Debt, because there is no discharge of indebtedness, the Chief Counsel concluded.

A lessee, while serving in the military, executed a motor vehicle lease and thereafter received military orders to deploy with a military unit. Under the provisions of the Servicemember Civil Relief Act (SCRA), 50 U.S.C. app. § 535, the service member is entitled to cancel the lease without penalty.