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  1. #1

    Default What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    My question involves bankruptcy in the state of: Texas. My bankrupcy was discharges a month ago. At the 341 meeting, the trustee made everyone, or at least everyone before me sign a document stating that he has the right to any state or federal tax returns, and that a copy of the tax return and any monies recieved ahould be turned over to him. Now, thats fine. But my refund was for 150 dollars, and just curious what happens to the refund if no proof of claims are filed?

  2. #2
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    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    There are situations in which a debtor's failure to turn over a tax refund, as ordered, has resulted in a revocation of the discharge.

  3. #3
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    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    Quote Quoting JoseFlores
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    My question involves bankruptcy in the state of: Texas. My bankrupcy was discharges a month ago. At the 341 meeting, the trustee made everyone, or at least everyone before me sign a document stating that he has the right to any state or federal tax returns, and that a copy of the tax return and any monies recieved ahould be turned over to him. Now, thats fine. But my refund was for 150 dollars, and just curious what happens to the refund if no proof of claims are filed?
    While I agree with the previous response, generally a trustee is not interested in a refund that is that small. Its too small to be worth dealing with.

  4. #4

    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    Ok, and I understand I am obligated to turn it over, but what if the trustee does not do anything with it? What happens to it?

  5. #5
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    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    I doubt the trustee will want the refund. Technically only the portion of the refund attributable to the period before you filed the petition for bankruptcy is eligible to be claimed by the trustee, so it is very likely that the trustee is not entitled to the entire $150 anyway. Depending on when you filed, the portion the trustee might claim may be only a small part of what is already not a very big refund. But alert the trustee that you have it and see if the trustee wants the pre-petition portion of it. Chances are the trustee will say no and you can keep it.

  6. #6

    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    Lets say he doesnt claim it, and nothin is done with the refund, will i still be able to cash check a year after the refund is issued?

  7. #7
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    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    Don’t wait a year to find out from the trustee if he/she wants the refund. Cash it now and just don’t spend it until you verify with the trustee whether the trustee wants it. If the trustee wants it, you send a check for pre-petition portion of the refund. But to answer your question, federal tax refund checks cannot be cashed later than one year after issue. You’d need to return the check to the IRS and get a new one.

  8. #8

    Default Re: What Happens if You Don't Report Your Tax Refund to the Bankruptcy Trustee

    Ok, so lets say I cash it, let it sit in the bank fir a few months to see if the trustee wants it, and never get notification that he does, will that be fine? Or would the discharge be revoked?

    I understand that the trustee is entitled to collect and administer my 2015 tax refunds. I understand that it is my responsibility to prepare and file my tax returns the way I normally wood and that I have a duty to provide the Trustee with copies of my 2015 federal and state returns as soon as they are completed, but no later than April 15, 2016. I understand that I should NOT do and rapid anticipation loan to recieve my refund faster, and that if I do, I will not be rembursed for the fee incurred in doing so. If I request an extension of time to file my tax returns, I will provide a copy of the request to the trustee.

    I understand that the trustee will be requesting that the IRS send my refund directly to his office. I further understnad that If I recieve those funds directly from the IRS, either by check or direct deposit to my account, THAT I MUST TURN THOSE FUNDERS OVER TO MY ATTORNEY OR DIRECTLY TO THE TRUSTEE at the address listed in the above letterhead, unless I have been advised otherwise in writing by the Trustees office.

    I understand that after the filing of my 2015 tax returns, should and amendment become necessary at a later date, I must forward copies of that amended return to the Trustee immediately.

    I herby represent and warrant to the trustee that I have read this complete document, and that I have had the oppertunity to discuss the contents with my attorney, and that I understand my obligations to report to the trustee and cooperate with the trustee in the administrator of my bankrupcy estate as set forth in this acknowledgment and that I have have recieved a copy of this document for future reference.

    Persuant to 18 U.S.C $152 a person who knowingly and fraudulently conceals from a trustee any property belonging to the estate of the Debtor is guilty of a federal crime punishable by fine and imprionment of not more than 5 years. Further, to the extent that you conceal a property of the bankrupcy estate from the Trustee or fail to follow any lawful order of the court, the trustee may seek to have your discharge denied or revoked. A denial of your discharge will not affect the Trustees right to administer the property on behalf of creditors. The trustee may seek both the turnover of the property and denial of your discharge should you conceal property of the bankrupcy estate.

    This is the letter concerning tax refunds that was signed. Nothing is really mentioned concerning state refunds, except for the fact that a copy of the state return needs to be sent. But it does not state that the state return will be taken. To me it sounds like only the Federal Return will be taken. Is this what you get from it?

    If I cash the state return, according to this letter, would I be following the rules?

    The IRS is responsible for federal returns, while the states are responsible for state returns. Correct?

    ???

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