Federal Tax Refunds

[Bob Walker]

My questions revolves around my refunds I have been working on trying to get refunded to me from the IRS. When I filed my Ch. 7 paperwork I had to list on the schedules the total amounts I was anticipating on receiving, but did not have a clear date as to when because the IRS is challenging them.

Our bankruptcy most likely is about to close soon as there are no other assets we have that the Trustee could take, yet they sent me a letter saying that I should send the refund checks as soon as they arrive and then they will send me my exemption amount back.

I told the Trustee during the 341 meeting that I did not know when I would receive the refunds, if even at all, and now here is a letter saying to send them in when I receive them.

My questions are:
1. Am I still required to send the checks after our backruptcy has closed?
2. Can the Trustee keep our case open until the refund issue with IRS is resolved?
3. What is my incentive now to even go after my refunds now if I know the Trustee would take them?

Thanks for any reply and input you have.

[lrprn]

My questions are:
1. Am I still required to send the checks after our backruptcy has closed?

These refunds are a part of your Ch 7 bankruptcy estate that was created the day you filed. Since the trustee has requested them, you are still required to send the checks to the trustee whenever you receive them.

2. Can the Trustee keep our case open until the refund issue with IRS is resolved?

Yes, it's possible. Any time there are assets involved like this, your case will usually take longer to close than normal.

3. What is my incentive now to even go after my refunds now if I know the Trustee would take them?

Since these refunds are owed to you and they are a part of your bk estate, I don't know if you can refuse to pursue it.

Have you run this situation by your bk lawyer? What does he/she say?

[Bob Walker]

Incentive

Since these refunds are owed to you and they are a part of your bk estate, I don't know if you can refuse to pursue it.

Have you run this situation by your bk lawyer? What does he/she say?

If I pursue it, it will cost me money because most likely I will be the one having to pay any court costs, postage, etc to get it. Like I said, I bear the costs and the Trustee keeps the money. Maybe I could deduct my costs from the amounts?

I have not contact my lawyer yet, but I will since I have a another question concerning another amount.

Thanks

[SinkingFast]

We went thru a similar situation with Income Taxes.

Filing in the Fall, Trustees can often be interested in next year's income tax refund. That's what happened to us. Our Discharge went thru like normal, but our case was held Open.

Our attny told us to file like normal, but to ask the IRS and State for checks instead. We were instructed to hang onto the checks, once they arrived, until the Trustee decided what he was gonna do.

We submitted our filed Income Taxes to the Trustee and waited. A couple weeks later, the Trustee abandon our refunds and issued the "No Asset" report. Our case Closed about 6 weeks later.

Hopefully you'll get a determination, one way or the other from the IRS. Once you know what the IRS plans to do, you need to send a copy of that letter to your attny. Your attny will forward it to your Trustee. Then the Trustee will decide what he/she's gonna do.

If you do get some refund from the IRS, you'll need to submit that original check to the Trustee. The Trustee can cash it. And as you were told, the Trustee will return the Exempt portion to you.