Nevada tax question

[mama2three]

I can't get my attorney to respond to my emails and we are ready to file our taxes for 2009. We were told by attorney that we would have to send our refund directly to the Trustee. She told us he would send a letter in December advising us to turn it over. We have not received anything from him, he never mentioned at any time to us that he wanted the refund, and a report of no distribution was filed the same day as our 341. Does this mean we can keep the refund?

[BKDefender]

If your attorney listed your estimated tax return amount as fully exempt and the actual tax return shows that you will receive at or less than you exempted, then there's nothing for the trustee to take. Some trustees want to see the physical check just to make sure that it is not more than you exempted, others will accept the copy of your tax return as proof of what the check is going to be. I always have my clients request a paper check and when they receive it I call the trustee to tell them the amount and if they want me to bring the check to them. If there is a non-exempt portion, they almost always want the check and will either deposit it and write you a check for the exempt portion or want you to write them a check for the non-exempt portion.

Here in Nevada we can exempt $1k wildcard per filer or $2k if filing jointly as a married couple. You also get full exemption for any EIC amount on top of that.
Since you filed on July 31st, 2009, then the trustee can only claim 7/12ths of your tax return (7 months out of 12 months of the year).

--William

[mama2three]

We were able to exempt $2,000.00 of it. We anticipate receiving $5,000 to $6,000. This is in line with our last 2 years of returns, which were provided to the Trustee

We are just confused because the Trustee never mentioned the return, never said to send him anything and filed the Report of No Distribution and asked to be removed from further duties as Trustee.

In Nevada is it normal for the Trustee to file the Report of No Distribution and then get the tax return without ever requesting it?

[BKDefender]

Not without asking for the tax return, no.

A report of no distribution means the trustee has not received any funds above and beyond his fees. Did you list your estimated tax return at $5k or did you list it only as $2k? If you did not list the full amount you expected then that could be why he reported no distribution. Since you get 7 out of 12 months of that return, if you get $5k back then the trustee would have a claim on $2,916.66 of it minus your $2k, so the trustee would get $916.66 and would be able to distribute some funds.
It sounds as if you didn't report your full estimated tax return or that the trustee didn't think you were getting more than $3,428.57 this year (7/12 of that is $2k).

Unfortunately, you're going to have to notify the trustee of your tax return, and he's going to get however much is over $2k after you multiply by 7/12 (i.e. divide by 12, multiply by 7).

--William

[mami2four]

I think your tax return is yours. my case was turned in to an asset case after my 341 due to my refund. You should just call the trustees office and they will tell you, you don't have to go into details about the amount.

[mama2three]

Looks like we can keep it!

So excited. I checked on pacer today and our case is officially closed. We are done.

I take this to mean our refund is ours to keep?

They can't request it now that we are discharged and closed right?

[BKDefender]

mama2three - if your case is closed them the bankruptcy court lacks authority to force you to turnover your tax refund. Just be forewarned that if the trustee finds out that you received a tax return that was not exempt, he can move to re-open the case, and file a motion to turnover tax return or in the alternative to revoke the discharge. When I do things I try to think about what the trustee would do so I can prepare for it, and if I was the trustee in your case I would reopen and file that motion. But someone would have to bring it to his attention first.

--William

[mama2three]

mama2three - if your case is closed them the bankruptcy court lacks authority to force you to turnover your tax refund. Just be forewarned that if the trustee finds out that you received a tax return that was not exempt, he can move to re-open the case, and file a motion to turnover tax return or in the alternative to revoke the discharge. When I do things I try to think about what the trustee would do so I can prepare for it, and if I was the trustee in your case I would reopen and file that motion. But someone would have to bring it to his attention first.

--William

Thanks for the input. We exempted the $2,000 from the wildcard, and in the amount of refund our attorney put "unknown." We did provide our previous 2 years of tax returns which are about the same or more than we are getting this year.

How long does he have to file this motion?

[BKDefender]

Honestly I don't believe there is a time limit. I've heard of cases being re-opened 4-5 years later by the debtor to file a contempt motion against a creditor that filed a lawsuit, got a default judgment, and garnished wages. As long as there is a compelling reason to re-open, and the asset being administered or the claim being administered was based on the prior bankruptcy, then I believe the case can be re-opened to do so.

--William