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  1. #1
    Join Date
    Jan 2014
    Posts
    3

    Default Attorney Never Forwarded Tax Returns to Trustee

    My question involves bankruptcy in the state of: Florida

    My wife and I have been in Chapter 13 for three years. Paperwork we receive from the trustee says to send our tax returns to our attorney and it will be forwarded to the trustee by them. So the past three years that's what we have done.

    Now get this, we talked to the attorney about filing an extension because my tax attorney files the whole family together. I was never told this wasn't allowed, I found out recently through research.

    Fast forward to this year (third return) and they file a motion to dismiss because no return was submitted. We were pissed because we thought that is what the attorney was supposed to do. We turn them in to our attorney again who say they never got them (we have non-bounced emails to one of their addresses), and the trustee asks for our refund. With some aggravation we spend $500 to have it merged into our payment because we need it right now for our kids dentist bills. Suddenly after the adjustment we have the trustee asking for our 2010 and 2011 returns because they say they never got those. My wife and I are panicking now. We don't know what is going to happen. We don't think they will modify our payment much because I was unemployed, then employed, now unemployed again and my wife switched jobs twice and we moved to a new town. She makes a bit less than before. We know they are going to ask for our returns from those years because were a decent amount. We thought the trustee would request our returns, not that we had to send them in. Why were we never told this? Anyway I used those returns to pay back family money we owed them from before the BK, so I can get it back to pay the returns. My worry is the trustee will dismiss our case, or punish us in some way. Nothing was done maliciously by anyone, so I am hoping they say, pay up and its over. Is there anything else I should worry about?

    Thanks!

  2. #2
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Attorney Never Forwarded Tax Returns to Trustee

    Your post is confusing. You state the Trustee wants your returns but you also state that you were not told you had to send him money and you do not know if you can modify the Plan.

    There is a difference between a return and a refund. The return is what you file. The refund is $$ you overpaid which is refunded to you. So, what were you required to give to the Trustee, returns or refunds or both? You state you sent your returns to your attny but were not advised to send in the $$ - which would not have been sent to the attny. Something is missing.

    If you are not sure as to what you were required to do, pull your copy of the Order Confirming the Plan. It should tell you if you needed to send copies of returns, pay refunds or both.

    If it was just the returns, find you copies and send them to the Trustee - problem solved.

    If it was also the refunds - sending the returns will only cure part of the problem. You will have to figure a way to provide proper payment to the Trustee.

    Des.

  3. #3
    Join Date
    Jan 2014
    Posts
    3

    Default Re: Attorney Never Forwarded Tax Returns to Trustee

    Sorry for the confusion, I almost confused myself. Short version: They are asking for our returns, which the attorney was supposed to send but never did. Which will lead to, I'm pretty sure, the Trustee asking for the refunds from those returns. What was supposed to be done with the returns and the refund was never properly explained by our attorney. I have sent the returns to the trustee. I used the refunds from those missing returns to pay back family from when they helped us before the BK. I can get that money back from my family and pay the trustee with a little embarrassment. If we owe the money I will find a way to pay it, I just want to make sure they won't dismiss my Chapter 13 or something crazy due to this error.

    - - - Updated - - -

    I should also clarify, the trustee originally only asked for our 2012 return because they said we hadn't sent them in. When they received it they asked for the refund to be turned in. We Modified our plan because I was forced to spend $1000 of it on my daughters teeth and the refund was rolled into the payment schedule. I was also trying to avoid asking family for money ever again, so I would rather pay the 10% penalty to the trustee and the $500 to my attorney to not ask. Right after we accomplished this the trustee asked for our 2010 and 2011 returns. Both the attorney and I are confused why they never received them. My attorney has my 2010 return on file but not my 2011 for some reason. So I sent it in to them to forward to the trustee. Awaiting to hear from the trustee and whats going to happen. My attorney said they will probably ask for the returns and that's it, which means I only have to embarrass myself and tell my family I wasn't supposed to give them that money and I need it back. I am hoping this is the case.

  4. #4
    Join Date
    Sep 2011
    Location
    OH10
    Posts
    17,019

    Default Re: Attorney Never Forwarded Tax Returns to Trustee

    It is normal for tax return money to be taken by the trustee. It prevents people from spending it frivolously or giving preferential treatment to family creditors they did not include.

  5. #5
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Attorney Never Forwarded Tax Returns to Trustee

    You state you filed bk 3 years ago. That puts it sometime in 2011.

    You then state that you are being asked for copies of your 2010 and 2011 returns. Those returns should have been supplied to the Trustee before your Plan was Confirmed. For whatever reason, it is coming to light now that the Trustee does not have copies. Ok, you are providing them.

    Assuming that you had not received the refunds (2010 to be specific) before you filed bk, the refunds for 2010 and 2011 (up to the month the case was filed) are pre-petition assets that must be accounted for to the creditors, hence the reason you were required to pay the refunds to the Trustee.

    If you received and spent the 2010 refund before you filed it would not be an asset. However, you state that you used the money to pay back a family member. Such payment would be preferential and thus recoverable by the Trustee.

    You need to sit down with your attny, go over the requirements of the Order Confirming and figure out exactly what the Trustee is entitled to. If it means asking for help from the family - do it. So long as you follow through your case should not be dismissed.

    Des.

  6. #6
    Join Date
    Jan 2014
    Posts
    3

    Default Re: Attorney Never Forwarded Tax Returns to Trustee

    OK Excellent, thank you for the help. I spoke to my family and let them know I should not have paid them that money and they are more than willing to give it back. Once we hear from the trustee I will get the money back and cut a check for them.

    - - - Updated - - -

    Final Update to anyone that finds this in the future. The trustee in my case asked for the refunds from 2010 and 2011. I send them the checks and it should be over. However best advice I can give is don't just listen to your attorney on what it is your supposed to be doing, research and find out for yourself. The miss communication cost me. Make sure you follow up that everything has been received and forwarded. My attorney deals with so many BKs, they gave me the info on what to do for a Chapter 7 instead of a 13. Just an simple mind slip, $10,000......

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