Tax refund processing time

[isabella]

I am actually get a tax refund this year, and get to keep part of it. I know bankruptcy cases require a manual refund to be issued, but it has been 16 weeks since I filed. I call am am told it is being processed. Anybody have an experience with this?

[justbroke]

I have never heard of them being processed manually. I have always had mine electronically done in "normal" time (1-2 weeks) and received electronic deposit. Have you talked to an actual person at the IRS or just use the automated system? There is probably a code on your account that may be preventing the check to be issued. The IRS can't just hold your money for no reason.

[isabella]

Yes, I have talked to a live person. I pulled my tax transcript and it showed a code of 840. The lady I spoke with said it meant it was being manually processed. She asked me a series if questions and when I answered yes to a BK, she said that was why. She could not give me a time frame however. I will call again Monday. Thank you Justbroke.

[LadyInTheRed]

I have had 4 refunds during my Chap 13 and none were ever delayed. I file electronically and my refunds are deposited into my checking account in less than a couple of weeks. Are you paying delinquent taxes in your plan? If so, that may be the difference.

[LadyInTheRed]

Just found the following on the IRS website. Make sure you are talking to the CIO.

Taxpayers in bankruptcy
Note:

All taxpayer refund inquiries regarding bankruptcy should be referred to the Centralized Insolvency Operation (CIO) in Philadelphia at 1-800-973-0424. Do not refer taxpayers to CIO if the only issue is the status of the refund and IDRS shows a refund is scheduled to be sent, or was recently sent.

http://www.irs.gov/irm/part21/irm_21-004-004r.html

[isabella]

Thanks so much! I will call that number on Monday :-)

[justbroke]

The IRS absolutely can not hold post-petition tax refund as that would be a violation of the automatic stay. The only way they cold hold post-petition tax refunds is to motion the court OR if you had post-petition unpaid tax liabilities.

What LITR writes is spot on. Those instructions are actually listed under IRS Transaction code 840.

[isabella]

Thanks so much. I am on a 60 month plan and will be discharged in December. This is the first refund I have received in my BK. I do have back taxes, but those are included in my plan and I know the IRS is the first to get paid. My car was paid off almost two years ago in the plan so I am sure some of that money is going to the taxes. Even if all my back taxes were paid with the refund I would still be getting money back. I don't understand the delay I will call Monday and see what I can figure out.

[LadyInTheRed]

My guess is that somebody has to check to see that you are still in an active Chap 13 before they release your refund. If your case had been dismissed without the tax liability being paid, then they would apply the refund to your tax liability. In your case, I bet they will release your refund. A phone call to the right department might help expedite the process.

[isabella]

Got my answer. It was forwarded to my Trustee back in April.

[justbroke]

Got my answer. It was forwarded to my Trustee back in April.

Greedy Trustee. See, they didn't delay the processing. They just re-directed it to the Trustee.

Hopefully, you had already written to the Trustee requesting to keep all or part of the refund.

[isabella]

My plan says I get to keep anything over a 1,000. Never had a refund during my BK. A friend who is also going thru BK in the same region with a different trustee, gets his refund then forwards it to the trustee. I figured that is what would happen and then I would just forward the 1,000 I was required too. Oh well.. I am relieved however the Trustee has been paid. SIX MORE MONTHS!!!!!