paying back IRS in plan, do I receive tax refund or do they keep it?

[spmtf]

getting about a 4k federal refund. Will I receive this or they will keep it and just deduct from what I owe them? I have to turn over any refunds to trustee. Reason I ask is that in 13datacenter my plan base went up 4k. If they keep it and deduct from what I owe does this impact me in anyway? I am not paying back at 100%.

[AngelinaCat]

If you owe the IRS any back taxes, and you are scheduled for a refund, they will credit that refund amount on what you owe to them.

[spmtf]

so if they keep the refund, why did my plan base go up 4k on 13datacenter? I was supposed to pay back a total of 40k, now it says 44k. If they keep the refund I am still only paying back 40. Why did it go up the 4k? Is that just a mistake?

[mickinfish]

If you owe the IRS any back taxes, and you are scheduled for a refund, they will credit that refund amount on what you owe to them.

I have $1200 of back taxes in my plan and received all of the 4k from my return..

[AngelinaCat]

We were a Ch7 with about 27K due to the IRS. Any refund or 'tax stimulus' went straight out the door of one office and into the door of another office, and was applied to the tax debt we owed.

The Ch13 gurus will have to answer more specific questions about your payment plans.

[tammygirl1]

After we filed our Fed, we looked online to see what was going on with our refunde. It has a code which meant it was being held up. We called and was told it was being held for back Child Support. We also owe back taxes within our plan. So we thought either way we would not get our refund..Received the check a couple weeks later to our pleasant surprise. They didn't take it for either the child support or taxes which is good since our plan had already accounted for the payments. Lawyer called trustee and they said they don't want our refunds..yeah. Although we do have to send our returns every year. On another note, we got a check for our State also..although they are the ones imposing the back child support. This was first year we were entitled to refunds I think because of lowered income and charity we claimed to get lower DMI last year.

[enginegirl]

typically, the IRS will take what you owe them and the balance will go to your trustee to go towards your creditors... if you are not paying back 100% they get it all....

[justbroke]

In a Chapter 13, the IRS is not entitled to any "right of offset" against a pre-petition (before you filed) tax debt! That would be a violation of the automatic stay in a Chapter 13. The IRS can, though, file a Motion for Relief From Stay (RFS) if they do want to do this offset. In most cases, the IRS doesn't do this. Example, I was in a Chapter 13 (confirmed) and had a refund of $7K. I owed the IRS about $4K being paid in plan. The IRS refunded the entire $7K, and didn't even delay the refund (even though their website indicated that it was delayed).

This is precisely why many Trustees try to "intercept" the IRS refund. However, the IRS has sovereign immunity and the Trustee is not allowed to interfere. That still hasn't stopped some Trustees from intercepting the refunds.

As to the issues with 13DataCenter... I never trusted the "claims" on there! I only looked at the ledger to see which checks were paid and cleared!

[AngelinaCatHub]

so if they keep the refund, why did my plan base go up 4k on 13datacenter? I was supposed to pay back a total of 40k, now it says 44k. If they keep the refund I am still only paying back 40. Why did it go up the 4k? Is that just a mistake?

I'm not a 13 Guru and maybe JB can chime in again, but I would wager it is interest/penalties adding. Not 13 so I don't know if the stay stops that interest. In 7 I believe it does until discharge. We are down to 12 from 27. Aren't paying for other peoples "stupids" just sooo rewarding? Love those Congressmen. 'Hub

[Pandora]

could it be that you exempted any returns when you filed initially? Maybe your trustee is allowing you to keep it as a lump sum payment, but is adding it into your plan in order for you to do so???

[woeisme]

We just went to a Financial Management Seminar our trustee held last week (it counts as our post-filing education class as was free, woo-hoo!) and the lawyer from the trustee's office said that the IRS is real hit and miss about whether they take refunds and apply them to tax arrears or if they send the refunds to the debtors. She said two people could have exactly the same circumstance, and in her experience one would get the $ back and one would get the $ applied to their tax debt, and that there is no rhyme or reason for it! She did say that at least in our district, that if the IRS keeps the refunds, the trustee won't double-pay them from the plan, and doesn't add the amount to what the unsecured creditors would get, so that if the IRS did keep a refund, it would mean the plan would end sooner. Don't know if all trustees do that, but she said ours did.

[MOMof3]

We included IRS debt in our plan when we filed in 2007. We actually recieved a refund for 2007 and 2008 taxes. They did NOT credit it against what we owed that was being paid in the plan. Our plan stipulated that we got to keep our refunds. We ended up owing in 2009 and are on a payment plan for that. We got a refund for our 2010 taxes, but it will be credited against our 2009 debt per the letter recieved by the IRS.

[justbroke]

The simple fact is this. If you're in a Chapter 13, the IRS can not offset pre-petition taxes by taking a future tax refund. There is one exception. That is if the IRS actually files a Motion for Relief from the Automatic Stay (MFRS) They are not immune from and have been penalized for violating the automatic stay in the past. This is precisely why they'd rather issue your refund.