IRS Refund In Excess of IRS Claim - what happens?

[ccrider]

I’m midway through a three- year Chapter 13. Included among my claims was $2,278 for the IRS, which is the full amount I owed at the time of filing. As of this month the IRS balance in Chapter 13 is $1,183.

My 2021 Federal Tax return resulted in a “refund” of $2,635. I don’t expect to ever get the refund, I’m pretty sure The IRS will forward the full amount to the Chapter 13 trustee. My question is what will happen the money in excess of the IRS claim? I’m assuming the trustee will apply it to other claims.

Has anyone else ever been in a similar situation?

[shipo]

I do not believe the IRS will forward any money to your Trustee. I'm trying to remember what happened in my case; I *think* the IRS kept the balance of what I owed them and sent me the rest.

[flashoflight]

I’m midway through a three- year Chapter 13. Included among my claims was $2,278 for the IRS, which is the full amount I owed at the time of filing. As of this month the IRS balance in Chapter 13 is $1,183.

My 2021 Federal Tax return resulted in a “refund” of $2,635. I don’t expect to ever get the refund, I’m pretty sure The IRS will forward the full amount to the Chapter 13 trustee. My question is what will happen the money in excess of the IRS claim? I’m assuming the trustee will apply it to other claims.

Has anyone else ever been in a similar situation?

I've heard a lot of boogeyman stories about the Chapter 13 trustee intercepting IRS refunds and I have not seen it happen. You will probably receive the entire $2635 refund. With a 3-year chapter 13, I'm guessing you will be allowed to keep all of it but find out for sure from your attorney.

[justbroke]

Generally, a Chapter 13 trustee trying to intercept an IRS refund just doesn't happen. In most places this is not allowed, and a ruling out of Michigan in 2010 affirmed that it shouldn't. The case reaffirmed that the IRS has sovereign immunity and the Trustee simply can't do that.

I have never seen the Florida Chapter 13 trustees try to intercept an IRS refund. The Chapter 13 trustees themselves say to get the IRS check, cash it, then send "certified" funds to the Chapter 13 Trustee. This is because they have no permission to intercept a refund.

(As for the boogeyman, it was allowed in certain districts a long time ago... as recently as 2010. But the landscape has changed and the IRS is smarter by just flat out saying... no thank you.)