IRS Liability for Charged off Debt - Statute of Limitations?

[Ritz12]

A credit card company charged off my debt from 1999 in 2006. They never contacted me on this matter and now the IRS wants $ because it showed up on my 2006 earnings as a cancellation of debt. It still shows negatively on my credit report. Can the ccc's do that? Isn't there a statute of limitations?
Thanks

[Credit Expert]

There is a statute of limitations however that is not what is important here. The IRS cannot tax you on a debt that has not been forgiven (settled for less then the full balance) and the credit card company should not have reported as such. A “charge-off” means that the company no longer wants to claim the debt as an asset and “charges-off” the debt. This does NOT mean that you are liable for anything other then the debt to the credit card company. I recommend you ask the IRS to investigate the debt further and explain that you never settled it and you should have no liability because of it.