A debtor filed his 2011 federal and state tax return on 2/14/12, and his property tax return on 4/30/12. The refund received on each was $8,456, $1,150, and $1,143, respectively. The debtor filed a Chapter 7 bankruptcy petition on 3/13/12. With the time period between the tax returns filed and the petition filing date in mind, is the trustee entitled to 20 percent of all the tax refunds in this scenario (is there some sort of "penalty" for the close proximity of the filing dates, etc.)?
The sum of the tax refunds ($10,749) is under the 522(d)(5) exemption limit, and the attorney did list the refunds as exempt under the exemption on Schedule C. However, the trustee warned that she was entitled to 20 percent of the debtor's tax refund. She said she based her entitlement on "the date debtor filed in 2012." Any idea what the trustee is getting at?
I have honestly never heard of this or experienced this in any of my cases, which there have been thousands, it seems if you exempted them properly then they would be exempt, if the trustee pursues this any further request the code or case law they are referring to in regards XX XXX 20%.
Also I did a quick through my bankruptcy guides and codes and found no mention of this.
Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
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