we owe the state for back taxes which are being paid through our chapter 13 plan.

[ROGER1961]

Will we get to keep our state tax refund since we are already paying the state thru the plan??

[justbroke]

Without some very specific legal process, the IRS, State Government or your creditors can take money that you made post-petition to pay for pre-petition overdue taxes. Simply put, they cannot do that. (There are some processes and some circumstances where this could happen, but it's too complex and even more speculative to think that the State or the IRS would go through that process.)

I owed the IRS about, I don't even remember... but it was tens of thousands. I had a refund right after filing. The IRS delayed that refund by... 3 days. Please don't use my situation for exactly what you may experience, but receiving a refund of $7,000 when I owed them tens of thousands, was very interesting to me.

The key for you would really be whether you need to surrender your State tax refund to the custody and control of the Trustee.

[wd2005]

I can only speak for myself but I'm paying back taxes to the state in my plan and I have received refunds. I have had to call the DOR's BK unit to get the funds released once but it wasn't pretty painless.

[justbroke]

wd2006... it "was not" or it "was" pretty painless.

[wd2005]

wd2006... it "was not" or it "was" pretty painless.

I just re-read my post and I don't know what I was thinking....or writing. It was painless. The MA DOR site said my refund was "processing" and after about 6 weeks I called the BK unit and they released the funds to direct deposit. Took only a few days.

[Tinker]

I have a similar issue (but with fed taxes) and from what I've read, the IRS will keep the refund to put toward the tax debt. Perhaps the state will be more lenient.

[Tinker]

I owed the IRS about, I don't even remember... but it was tens of thousands. I had a refund right after filing. The IRS delayed that refund by... 3 days. Please don't use my situation for exactly what you may experience, but receiving a refund of $7,000 when I owed them tens of thousands, was very interesting to me.

JustBroke,I just read your reply after posting my own. Your experience gives me hope! We have 2 cars that need repairs and could really use that fed tax return money!

[justbroke]

I have a similar issue (but with fed taxes) and from what I've read, the IRS will keep the refund to put toward the tax debt. Perhaps the state will be more lenient.

The IRS can't hold your post-petition refunds to pay "pre-petition" taxes. It's just not allowed. The IRS could petition the court to keep the refund, but it would need to be a very well thought out motion to apply a post-petition refund to a pre-petition tax debt.

Please note that I'm talking in the context of a Chapter 13.

As I wrote, I received about a sizeable refund after I filed and I owed the IRS tens of thousands at the time. It only caused a minor delay in receiving the refund. You may need to call the insolvency unit if it doesn't move on its own. I called into the 800-number to check on the status and kept looking up the status code online. I was excited when the system revealed that it was deposited to my bank!