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Tax Return and Refund Information

It is your responsibility to timely file all federal, state and local tax returns both prior to and after the filing of your Chapter 13 Petition.  The Chapter 13 Trustee will not complete or file your tax returns for you.  If your tax returns have not been filed or become delinquent during the course of your Chapter 13 plan, you may lose the protection of the Bankruptcy Court as your case may be dismissed.  During the life of your plan, the Chapter 13 Trustee may periodically request copies of your federal, state and local tax returns.  It is your responsibility to provide those documents when requested by the Trustee.  If you experience issues with filing your tax returns, please contact your attorney.

Some Chapter 13 Plans require debtors to pay into the plan their federal tax refunds.  Typically, tax refunds are required on all cases where unsecured creditors are paid less than 70%.  If tax refunds are required in the plan as payments, it will be stated on your confirmed plan.  If your plan requires tax refunds to be paid into the plan as additional payments, then you must timely submit a filed IRS Tax Return (Form 1040) each year to the Chapter 13 Trustee.  Please contact your attorney with any questions regarding whether your plan requires that your tax refunds be paid to the Trustee.  If you were not required to file a tax return during a plan year, please contact your attorney regarding the appropriate course of action for compliance with your plan.  The Office of the Chapter 13 Trustee will not return phone calls regarding the status of tax refunds.

The administration of tax refunds in a case can be confusing, so please make sure you understand your duties.  Here is a quick summary of the administration of tax returns and tax refunds:

  • Once you have filed your IRS Tax Return (Form 1040), please give your attorney a copy to send to the Chapter 13 Trustee.
  • After you have filed your IRS Tax Return (Form 1040), it takes 6 to 10 weeks and sometimes longer for the Trustee to receive your tax refund.  After receiving a copy of your filed IRS Tax Return and your tax refund, it then takes 2 to 3 weeks to process tax credits that might be returned to you, if any.  If we do not receive a tax return within 60 days of receipt of your tax refund, then any tax credits will be deemed abandoned and released into your case as an additional payment.
  • If you are behind in your plan payments and part of your tax refund includes tax credits, then the Chapter 13 Trustee may retain the tax credits to bring your plan payments current.
  • If you received your tax refund or it was intercepted by a third-party, please contact your attorney regarding the appropriate course of action for compliance with your plan.  It is your responsibility to ensure tax refunds are sent to the Trustee.  The Trustee will not attempt to collect these funds on your behalf.  If your tax refund was intercepted by another organization, then documentation of this interception must be provided to the Trustee.
  • Please make sure that you have an updated mailing address with your attorney’s office.  If you do not wish to have the refund mailed to your home address, then we can mail the refund to your attorney’s office.  You cannot pick up your refund check at the Trustee’s Office.
  • Chapter 13 cases that have been confirmed as “plus tax refunds” are meant to give an added dividend to your unsecured creditors, so please understand that tax refunds do not typically pay your case out faster.  Before our closing department can quote a payoff on a Chapter 13 case which has the language “plus tax refunds,” we must have all copies of your IRS Tax Returns (Form 1040) for every tax year in your Chapter 13 case and any tax refunds due the Trustee.
  • Tax refunds do not cure missed plan payments in a “plus tax refunds” case.  Keep this in mind when reviewing your receipts through the Online Case Information system.