Tax debt discharged, state kept my refund

[wipetheslate]

I had some state tax debt that met the requirements for discharge when I filed last October. I received my discharge back in February. I've been twiddling my thumbs waiting for my tax refund since I filed back in April, and I finally managed to speak to someone that said it was kept to pay off my tax bill.

It's $500. How do I get that back?

[drowning123]

You really wanna fight the IRS? Was it explained to you that your tax return is exempt or non-exempt? I say let it go.

[angles]

you will spend more than 500.00 in time trying to get that back, if you get it back. i would let it go also.

[wipetheslate]

You really wanna fight the IRS? Was it explained to you that your tax return is exempt or non-exempt? I say let it go.

STATE tax debt, not the IRS. I waited to file so that I met the requirements for a discharge of my tax debts.

I had some federal taxes that I discharged, but the IRS didn't pull this BS and gave me my refund.

The state has sent no paperwork documenting what they did. They just took it.

[bcohen]

you will spend more than 500.00 in time trying to get that back, if you get it back. i would let it go also.

The issue isn't just this $500.00, but the chance that the state will continue doing this year after year and keeping his money for a debt that was discharged in bankruptcy!

[drowning123]

Write the state and attach your copies of your documents showing that the debt was discharged and see what happens.

[jetsfan2010]

did you owe anything other than the debt that was discharged?

[jacko]

Are state tax discharge follow the IRS rule? That a filed state return has to be three years old before you can discharge. What if you did not file a state return, and the state revenue dept sent you a bill anyways, does the bill activate the two year count down?

STATE tax debt, not the IRS. I waited to file so that I met the requirements for a discharge of my tax debts.

I had some federal taxes that I discharged, but the IRS didn't pull this BS and gave me my refund.

The state has sent no paperwork documenting what they did. They just took it.

[mom2crazies]

Did you owe for the current tax year and was the current tax year included in the discharge, if so? Also, did you check to see if they had any objections to the discharge? Our creditors had a certain amount of time they could object. Otherwise, just send them the copies of the discharge and documentation. There should be a specific department that you can work with. Our state tax was not discharged, but I do remember there was one specific person who dealt with the bankruptcies. Getting to the right person, is half the battle - Especially with state tax commissions.

[Pandora]

did you owe personal property / real estate taxes AFTER your filing? If so, then they offset more than likely....

[disconapper]

I had a wage garnishment order by my state, they continued to garnish my wages after I filed. It took some time on my part but I eventually got the garnishment stopped and they have since refunded the money they took from me. I still owe the tax debt, it was not discharged in my bankruptcy but the garnishment was one of the reasons I had to file....I ended up calling the Compliance Enforcement division for my state and speaking to a State's Attorney, once she was involved the situation quickly resolved itself. Perhaps that would work for you, but like mom2crazies wrote, contacting the correct person is half the battle and that was biggest hurdle.

[JackBondLove]

Even though a debt to the government may be legally discharged, all that means is that the government cannot sue or hound you for it. If within some time period (which I believe is 10 years) somehow the government were to owe you some money, then the government would simply deduct that debt from that amount. The government owes you when you overpay your taxes, and even when you are collecting Social Security (which can be garnered at 25%.) Because I was able to take advantage of the new home buyer's credit, I had to make sure to generate a taxable event that would result in a tax liability equal to that credit (I did a Roth conversion), since if I were to have had a refund, it would have been confiscated!

[gmk]

Contacting the state and finding the right person or department as recommended above is the best course of action. As far as bcohen states: "The issue isn't just this $500.00, but the chance that the state will continue doing this year after year and keeping his money for a debt that was discharged in bankruptcy!," I think you can count on it. The states' are notorious for being above the law when it comes to keeping your money. I'm involved with IL in a different but parallel situation and it's borderline fraud on the part of state. However, they have my money so it's up to me to come and get it, which I'm doing.

My advice to the OP is to adjust your withholding to the extent allowable but so that you will have to pay a little tax. If they have your money, trying to get it back can be a real challenge. Will they try it again? Sure. I might even go so far as to consider the amount that they are holding from your 2010 filing as pre-payment on your 2011 return filing. That will raise a few eyebrows but seeing how it plays could be interesting. After all they can't be keeping it to pay a debt that has been discharged, can they.