IRS kept the tax refund we were told we could keep!

[lookin4info]

As part of our plan, we were told that we could keep any Federal Tax Refund under $1600. For 2010, we thought we were going to have to pay but actually got a refund for the first time in over 10 years! We were so excited, but today I found out IRS kept it and called it Pre-Petition. Bummer! Does this seem right and is it true! Any feedback would be appreciated.

Thanks!

[free2breathe]

Did you owe the IRS for previous years? If so, I believe they get first shot at any refund.

If you didn't owe, then it sounds like normal bankruptcy procedure. You filed bk in January. Any funds due to you prior to your filing date are considered "property of the estate". It's normal for the IRS to hold the refund until they get instructions from the bankruptcy trustee to either send it to him or send it to you. If I were you, I'd contact your attorney and ask him to look into it for you.

[tammygirl1]

We got ours back even though the IRS site said it was being held for back Child Support. We were extremely pleased when the trustee allowed us to keep it.

[freeme0215]

I am in a Ch 13, first 6 month payments were to the mortgage and pay off the remaining balance on the attorney fees. Now this is my first month of paying the IRS a payment. The problem is that I am going to have to convert to Ch 7 due to the loss of income.

What will happen to the payment plan to the IRS? After the conversion will they allow me to still do the payment plan directly to them?

Thanks

[MOMof3]

That makes sense I think if you had IRS debt included in your bankruptcy and you didn't file until 2011. 2010 taxes (and all prior year debt to IRS) would have been included in bankruptcy, so whatever you owed, or were refunded, would be pre-petition, but it should lower the amount the IRS files their final claim for your plan. Good news is that any future refund should be yours to keep--just be careful about ending up owing--we are on a payment plan for 2009--oops.

[dbr]

What is the chance of keeping a refund on the sly? Doe the trustee check any/all the people they cover? We were told by the paralegal we must request permission to keep but now they want the last two years of tax returns. We are contemplating keeping the check and hoping they don't audit. How can they check if they don't audit, what's the process? Anybody know ???

[free2breathe]

I would never advise anyone to keep a refund "on the sly". Especially if the paralegal told you you'd have to request permission to keep your refunds. Providing previous years' tax returns is standard in any bankruptcy case. The trustees do use them to look at income reported, deductions, pattern of refunds in prior years etc. If I'm not mistaken, they have every right to look at any of your tax returns while you are in an active 13 as well. From what I've read, while you are in a chapter 13 plan, your return will not only be seen by the IRS, but it will be sent to the bankruptcy trustee as well. If there is a refund, and IRS is not part of your active plan, the refund can be processed one of two ways. If it's over $2k, it can be send to the trustee to determine how much if any you will get of that refund. If it's under $2k, they can release the refund to be sent directly to you. I'm no expert, again this is only what I've read when researching online.

This issue seems to get discussed a lot with many different scenarios. It depends on your district, your trustee, etc. etc. etc. I have yet to find any set-in-stone rules for trustees and tax refunds, regardless of the chapter you file.

[newbie2]

What is the chance of keeping a refund on the sly? Doe the trustee check any/all the people they cover? We were told by the paralegal we must request permission to keep but now they want the last two years of tax returns. We are contemplating keeping the check and hoping they don't audit. How can they check if they don't audit, what's the process? Anybody know ???

Don't do anything "on the sly" while you are in a Chapter 13. Nothing. Your attorney is your attorney for the life of the plan. Talk to him/her about this type of thing.

[lookin4info]

I did get a call back from the atty's office and they've made a call to their IRS contact to see if we can get it back since our taxes are all included in our Ch 13 plan. Oh well, I guess we'll wait until next year if we don't get it, but it sure would have been nice. We won't owe for next year, but I'm gonna make darn sure our refund it not over $1600 so we can keep it

[AngelinaCatHub]

What is the chance of keeping a refund on the sly? Doe the trustee check any/all the people they cover? We were told by the paralegal we must request permission to keep but now they want the last two years of tax returns. We are contemplating keeping the check and hoping they don't audit. How can they check if they don't audit, what's the process? Anybody know ???

Bankruptcy is a gift from our Constitutional Founders. It gives us a second chance whether by C7 or 13. If you cross the Federal laws, you will turn a gift of our Father's into a felony. You would not want that to happen. If you get your money do what is proper. We are stuck with our current tax laws. Read about the "Fair Tax". Would be better for all.

Don't shoot yourself in the foot.

I did get a call back from the atty's office and they've made a call to their IRS contact to see if we can get it back since our taxes are all included in our Ch 13 plan. Oh well, I guess we'll wait until next year if we don't get it, but it sure would have been nice. We won't owe for next year, but I'm gonna make darn sure our refund it not over $1600 so we can keep it

Your best bet is to declare the least amount of taxes by law. It is NOT a savings account. No interest. If you owe taxes it is good that they apply it to your debt. It will not go away.

We got our very first tax return in ten years of $1100. We got a letter that it was applied to taxes owed. I was VERY pleased. We were an asset case and most of our asset proceeds went to the tax bill. GOOD! The sooner I get away from IRS the best. I owed 27K I'm down to about 9K. 'Hub