Owe IRS while awaiting discharge, will they keep my refund or is it protected?

[sunkinsc]

So I know I am in the red with the IRS but we actually have money coming back for once. Trustee doesn't want it and we are in our 60 day waiting game now. I do owe the IRS back taxes so I am assuming they will just keep it but then I have a glimmer of hope that maybe they cannot while I am in Chapter 7

Am I having false hope

[HHM]

That depends if you are willing to fight it. Generally, the IRS will exercise their right to set-off notwithstanding the BK, however, doing so (arguably) violates the bankruptcy automatic stay.

[MC9199]

Being in the same situation this year, they deducted what I owe them from my 2009 refund.

[music12]

forget it, the IRS will take it. if you owe it anyway, why fight it? you'll end up having to pay it one way or another.

if you really really don't want them to take it, you'll have to call them to arrange a payment plan. yes, you shouldn't have to do that during the automatic stay, but this is the IRS...

[CCsAreEvil]

I think the IRS may have more power than our US President.

[AngelinaCat]

We were on a payment plan to pay our back taxes when we filed BK Ch7. When the IRS received their copy of our 'Suggestion of Bankruptcy' they suspended our payment arrangements until after we were discharged. Once we were discharged, 'Hub contacted the IRS and reestablished our payments. While we were awaiting Discharge, Pres. Bush announced his Stimulus program. Our supposed stimulus check of around $2,000 was immediately gobbled up by the IRS. It never managed to get out the Treasury's door. It was applied to the taxes we owed for 2004.

Then this year we actually were in line to get about $200.00 back as a refund. The IRS gobbled that up too an applied it to the back taxes that we owe. So don't count on seeing your refund. Instead, you will get a statement that says $xxx.xx was applied to taxes owed for whichever year you owe. This can be a nice thing, seeing your tax debt being reduced, without you having to write a check.

Good luck to you!

[sunkinsc]

No worries

Never expected to get it anyhow but thought I would ask. Definitely not going to fight it either. Either way it has to be paid and this will take a chunk out of my bill anyhow.

Thanks for all the replies.

And as I see it, the Prez is prepping for more control than ever so the IRS better look out

[MarieT]

Never expected to get it anyhow but thought I would ask. Definitely not going to fight it either. Either way it has to be paid and this will take a chunk out of my bill anyhow.

Thanks for all the replies.

And as I see it, the Prez is prepping for more control than ever so the IRS better look out

We were expecting to get a tax refund of about $1800 but we're on a payment plan with the IRS so it is pretty much a given that they will intercept and apply it to what we owe the IRS. We are pretty sure that we will be able to to get the balance we owe to the IRS dismissed in BK as it fits all the criteria of being able to be written off.

That said, if we do get the debt written off, will the IRS have to give the $1800 back to be disbursed to the other creditors or any of the other payments we have made in the last 90 days? I really thought we should have waited and filed an extension so they would not just automatically take the money.