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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience:  15years with H & R Block. Divisional leader, Instructor
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I owed $250k to the IRS and $25k to state income tax. (all

Resolved Question:

I owed $250k to the IRS and $25k to state income tax. (all due in years 1994 thru 1998) I filed for Cahpt 13 bankrupcy and it was 'approved' and I am makimg $500 monthly payments to the Bankrupcy Trustee.

For Tax year 2012 I overpaid my taxes and am due a refund. Will I get the refunds? Or will the IRS and state just keep my money?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
IRS will send your refund to the Chapter 13 Trustee, unless IRS elects to offset a prepetition refund (keep it and apply it to any back taxes you may owe to IRS).
Under BAPCPA, the automatic stay does not prohibit the IRS from setting off prepetition income tax refunds against prepetition income tax liabilities. 11 USC § 362(b)(26). Where the automatic stay prohibits other types of setoffs, the IRS can temporarily retain a refund to preserve its setoff rights.

Robin D :

The answer is that the IRS can keep it but only the IRS agent can say for sure if they will.

Robin D :

The IRS will send you and your attorney a written notice telling you what they have
done if they do offset the refund.

Robin D :

See Section 362(b)(26) of the Bankruptcy Code for setoff rights by
the IRS.

Robin D :

The system said you stepped into CHAT then stepped out

Robin D :

I can change to regular Q&A

Customer:

IF the IRS refunds the overpayment to the trustee, will that amount reduce (or apply to) my currently required $500 mo payment schedule?

Robin D :

If the amount is applied then the plan would be modified. You would have to ask your attorney or call the trustee's office directly to speak on specifics of the modification of your payments.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and other Tax Specialists are ready to help you

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