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The actual question is more like 'What is stopping a business that sells services or goods from artificially increasing the amount a debater owes after they have defaulted so they can write off more losses and decrease their tax liability?
Take this for example: John has defaulted on his cell phone bill and now owes $200 to his former cell phone provider. John continues to ignore their collection efforts so they sell the debt to a collections company. The cell phone provider tacks on an extra $800 as a sort of "collections fee" before selling it to the collector. This should allow the company to write off $1000 total in losses and there by decreasing their tax liability.
Is this a logical assumption? Are there limits which companies have to follow when adding fee's or anything like that to this sort of effort?
Take this for example: John has defaulted on his cell phone bill and now owes $200 to his former cell phone provider. John continues to ignore their collection efforts so they sell the debt to a collections company. The cell phone provider tacks on an extra $800 as a sort of "collections fee" before selling it to the collector. This should allow the company to write off $1000 total in losses and there by decreasing their tax liability.
Is this a logical assumption? Are there limits which companies have to follow when adding fee's or anything like that to this sort of effort?