IRS E-File regulations

[Chicken123]

I stopped by my tax preparers, office today and picked up dh and I's tax worksheets for our income taxes, there was a letter attached that stated "due to IRS regulations any tax preparer that will have over 100 tax filings, must e-file customers tax forms" "starting this tax season, your taxes will be e-filed"...Now my question is, our trustee told us that we have to "paper file" our income taxes, so what do we do in a situation like this? Should I call my attorney and see if it's okay to e-file? I don't want to change tax preparers if i don't have to. I paper filed last year (before these new regulations) check was mailed to us, and then anything over 1800.00 on federal was mailed to trustee via money order, and then State check was also cashed, money order bought and mailed in full to trustee...All I have to do is send trustee the difference and of course mail copies to attorney to forward to trustee. Im just confused on what would make the difference between efile & paper if the trustee is trusting us to forward the overage to her anyways.......Any help would be greatly appreciated! Thanks!

[justbroke]

I have never read where a Trustee requires a tax return to be paper filed. What they do require, is if there is a tax refund, then the check must be a paper check. In other words, don't seek to have the refund direct deposited.

I'm pretty sure that this is all about how any refund is distributed, and not how you actually file the return.

[CCB35]

it should'nt make any difference-my trustee sent a letter to the irs to intercept any refund-In Northeast Tn
i am allowed to keep anything under $1500.the only stipulation i had on filing my taxes was-no rapid refund or anything like that

[HHM]

I think what the trustee is saying, is he does not want you to have your tax refund electronically deposited.

If the trustee is really telling you to "paper" file the return, tell the trustee to shove it (assuming you have a lawyer with a back bone), show the trustee the IRS regulations and make the trustee file a motion to dismiss and have a judge tell you that you can only file a paper return.

[justbroke]

it should'nt make any difference-my trustee sent a letter to the irs to intercept any refund-In Northeast Tn

Most Districts do not intercept payments from the IRS. As a matter of fact, there was a recent decision in one of the District Courts which basically found that the Trustee had absolutely no right to force the IRS to redirect funds to the Trustee.

[Chicken123]

Thanks for all your help, I just don't see why paper check vs direct deposit mattered, since I am personally sending the overage to our trustee...I think I will just call the tax preparer and explain to her the situation and see what she says. If I can't get anywhere with her, I'll call our attorney.

[Ifonly]

At one of the professional sites I'm on, there has been a lot of speculation that the taxpayer themselves can insist on opting out of the e-file process. This rule focuses on the tax preparer's compliance, not the taxpayer's. The IRS regs are a bit fuzzy and there seems to be wiggle room in this regard; you can also just find another tax preparer (who will probably charge less, especially if they're not doing e-file).

[walkthaplank]

It is none of the trustees business HOW you file, only that you do and supply them with a copy. The trustee cannot overrule IRS regs, the trustee cannot tell you to do something that violates IRS regs. E-file your taxes, give the trustee a paper copy of the return and any part of the refund due the trustee in a timely fashion.

I think you are over thinking this one.

[cspa522]

My trustee says we can keep $600 of our tax refund, but no where have I read anything about only paper-filing vs. e-filing or anything like that. Nor have I heard anything about "don't have your refund direct deposited." If that was a stipulation, wouldn't it have been included in the plan instructions? The only time a method of payment is mentioned is where it talks about how our plan payments are sent in - only by cashier's check or money order.

[chicagoed195]

An indivdual may opt out of filing electronically when having their return prepared by a service that is mandated to process returns electronically. The taxpayer signs an opt out form that the preparer retains.

[Chicken123]

I just called my tax preparer and she stated that she could e-file our taxes, but opt for the paper check being mailed to us instead of direct deposit. I read on an earlier post that the reason the irs/trustee requests this is because a chapter 13 could throw up a red flag when processing a efiled return.

[justbroke]

The major issue for Chapter 13 Trustees is that many Chapter 13 debtors who must surrender any refund may not do so if they receive it electronically! It's much easier if the money never reaches the debtors account and the paper check is turned over. In some Districts, until a recent decision, would go so far as to intercept the refund check by diverting it to the Chapter 13's address.

In any event, I'm glad you worked this out with your preparer.

[justbaby]

Wow! I guess its true some trustees are rough! My trustee hasn't said anything to me regarding turning over any of my refund. I was confirmed in October2010...could that change? In fact I went as far as to call my IRS specialist I worked with to do my amendments and she was the person that filed my proof of claims for the IRS, she said that I will get my refund. Wouldn't she know if that wasn't the case? Apparently certain states (districts) require it, especially if you owe back taxes but in my district, its not.

[justbroke]

Wouldn't she know if that wasn't the case? Apparently certain states (districts) require it, especially if you owe back taxes but in my district, its not.

Generally speaking, the IRS cannot take your refund and offset a prior tax obligation if you are in a Chapter 13 and your Plan pays back the IRS.

If the amount is significant, the IRS could delay your refund, and then motion the court to offset the taxes. They need Trustee and Court permission to do so. The IRS is bound by the automatic stay just like everyone else!

Case in point, I owed the IRS about $4K during my Chapter 13, yet received both my refunds which were a lot more than $4K.

[justbaby]

That is great to know! Reading these forums can make you paranoid! I owe roughly $4K as well...not expecting THAT much back but something is certainly better than nothing!