IRS: future refunds when you have back taxes in the plan

[holding on]

A recent thread about IRS back taxes popped this into my head (I know, very dangerous! )

I have 17k of IRS back taxes in my plan. Does anyone know or have experience on how future refunds are handled by the IRS? Does the IRS go 'oh, you have back taxes in your plan, so we will reduce that amount by your refund' and then the trustee adjusts their claim? Or do they just give you your refund?

[petej]

Almost certain the IRS will not send refund to you but to the trustee. The question is whether the refund reduces the IRS debt or is distributed according to the matrix..??

[cso5@]

I have back taxes in my plan -- not $17K, though....so maybe it is different if it's a lower amount. It's about $7K in taxes and maybe $1.5K in interest / penalties.

Here's how it goes with my plan: the interest and penalties are an unsecured claim, the actual back taxes are a priority claim.
Refunds since I have filed come to me, but they are delayed a day or two. I e-file. If there is a refund aggregate (state and federal) that is over $1500, it all comes to me all the same, but I have to give the trustee whatever that amount over $1500 is.

My income tax stimulus came as it was supposed to, as well. I called the trustee's office and they were not going to take that.

[HHM]

In a 13, you should still get your refund. I think the IRS would be violating the automatic stay if they withheld your refund and applied it back taxes. Or, at least the trustee is given first crack at it.

[jetsfan2007]

Almost certain the IRS will not send refund to you but to the trustee. The question is whether the refund reduces the IRS debt or is distributed according to the matrix..??

not true. I filed originally in 10/07, and my refund came directly to me this past March. I had back taxes in my plan as well

[cso5@]

It comes to you, but I think the trustee has to ok it or something -- that's what the delay is when I call the IRS -- they say, we are waiting for the trustee to approve its release.....

[MajorMike]

Almost certain the IRS will not send refund to you but to the trustee. The question is whether the refund reduces the IRS debt or is distributed according to the matrix..??

We have back taxes and get our full refund because the amount we owe the IRS is being paid inside of the plan.

Now, when we filed our 2007 taxes, we owed about $670.00 and got a letter from the IRS that they will hold our stimulus to pay it and we will get the difference.

[Flamingo]

We had about $2,000 due the IRS in our Chapter 13. We received a refund in year three of our Plan but we were advised by the IRS that they do not take refunds for the years after you file and apply that refund to the amount included in the filing because you are making payments to them via your Trustee for the amount due for a specific year(s) and refunds after that time are for different years and you are under the protection of bankruptcy. However, the Trustee can intercept your refund and apply it to your Plan to distribute to your creditors.

[holding on]

wow. another case of different procedures for different areas. This is what my lawyer told me (major points, he replied to me during the weekend!) he says the IRS will almost certainly intercept the taxes and then the IRS would file an amended proof of claim to notify the Trustee that the tax refund was received.

If this is indeed the case, then I assume I should set my allowances to the max possible so i get as little refund as possibe. Don't need the trustee having before his eyes I'm overpaying.

[bigreddog]

Refund check AND stimulus check......

This may sound incredible, but when we had our taxes done, our accountant said we'd be getting $3301 back. Knowing that our trustee or the IRS would take it I told him to check the box where it says to apply to next years return. You know, throw the dice. Then we had a meeting with our attorney. He said no way. Ask for the refund. We'd get it. Yeah right. Well yesterday we got the check for the $3301 AND the $1200 stimulus check!!!!! I told my wife to hide them and cash them at a different bank then our own so we can pay our $6000 workers comp. insurance deposit in 2 weeks that we had no idea how we'd come up with. Yahoo!!!!

[bigreddog]

We owe the IRS $10,000. $8,000 priority and $2000 non. We've been paying into our plan for 13 mths. now at $571. The attorney just got his last payment and the IRS is down to $6000 on the priority. MAYBE that's why they didn't take it?????? On our total plan we are paying 11.4% to unsecured creditors totaling $142,000. So far, I can't complain.

[buchanj]

Intersting thing that happened at the 341 meeting. The trustees assistant wanted certain forms filled out and one of them was power of att for getting the refunds directly to them. My att told me not to sign that one. I do have to give the refund to the trustee for the first 3 years but I send it. This helped in 2 ways....one was the stimulus which I believe would have went straight to the trustee if I signed that paper and also after the 3 years I will not have to contact the trustee for my refund.