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Which takes precedence; IRS or the trustee

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mcwjjm

Member
What is the name of your state? Ohio. I'm guessing the goverment but here goes. The mother of my two children and I seperated late November '05. Early January she asked me to claim the kids because she didn't work enough to file. I said I would split the refund 50/50. She didn't object. After I file she not only changes her mind about filing but also feels she's entitled to the entire refund. She only worked maybe a month in '05 and I paid all the bills, provided her with car and split most of the other expenses. I also began paying her CS in November, even though there is no CS order. We lived together for almost the entire year and I certainly had the higher gross income so based on what I've read I believe I'm entitled to the refund, not her. She took out some small student loans and I did co-sign a 10k loan for her to buy a car/PC in August. She's contacted the IRS and I'm expecting something in the mail to determine who gets what. We were never married.

Now here is where it gets tricky. I filed chapter 7 October 12, '05. During the 341 hearing on December 6th the trustee asked what I was expecting for as a refund. I told him "$1,200", not expecting to claim either child. Now my refund is $5,600. Most of that was EIC but my question is what happens if the trustee takes the refund and then the IRS finds the mother is entitled to part or some of it. Or what happens if the IRS makes a judgement before the trustee? It's been over 60 days since the 341, so technically I'm discharged but haven't received any official word on that, the closure of my case or anything from the trustee about my '05 tax refund.
 


seniorjudge

Senior Member
mcwjjm said:
What is the name of your state? Ohio. I'm guessing the goverment but here goes. The mother of my two children and I seperated late November '05. Early January she asked me to claim the kids because she didn't work enough to file. I said I would split the refund 50/50. She didn't object. After I file she not only changes her mind about filing but also feels she's entitled to the entire refund. She only worked maybe a month in '05 and I paid all the bills, provided her with car and split most of the other expenses. I also began paying her CS in November, even though there is no CS order. We lived together for almost the entire year and I certainly had the higher gross income so based on what I've read I believe I'm entitled to the refund, not her. She took out some small student loans and I did co-sign a 10k loan for her to buy a car/PC in August. She's contacted the IRS and I'm expecting something in the mail to determine who gets what. We were never married.

Now here is where it gets tricky. I filed chapter 7 October 12, '05. During the 341 hearing on December 6th the trustee asked what I was expecting for as a refund. I told him "$1,200", not expecting to claim either child. Now my refund is $5,600. Most of that was EIC but my question is what happens if the trustee takes the refund and then the IRS finds the mother is entitled to part or some of it. Or what happens if the IRS makes a judgement before the trustee? It's been over 60 days since the 341, so technically I'm discharged but haven't received any official word on that, the closure of my case or anything from the trustee about my '05 tax refund.

Well, the IRS can throw you in jail, so I guess they win.
 

LdiJ

Senior Member
mcwjjm said:
What is the name of your state? Ohio. I'm guessing the goverment but here goes. The mother of my two children and I seperated late November '05. Early January she asked me to claim the kids because she didn't work enough to file. I said I would split the refund 50/50. She didn't object. After I file she not only changes her mind about filing but also feels she's entitled to the entire refund. She only worked maybe a month in '05 and I paid all the bills, provided her with car and split most of the other expenses. I also began paying her CS in November, even though there is no CS order. We lived together for almost the entire year and I certainly had the higher gross income so based on what I've read I believe I'm entitled to the refund, not her. She took out some small student loans and I did co-sign a 10k loan for her to buy a car/PC in August. She's contacted the IRS and I'm expecting something in the mail to determine who gets what. We were never married.

Now here is where it gets tricky. I filed chapter 7 October 12, '05. During the 341 hearing on December 6th the trustee asked what I was expecting for as a refund. I told him "$1,200", not expecting to claim either child. Now my refund is $5,600. Most of that was EIC but my question is what happens if the trustee takes the refund and then the IRS finds the mother is entitled to part or some of it. Or what happens if the IRS makes a judgement before the trustee? It's been over 60 days since the 341, so technically I'm discharged but haven't received any official word on that, the closure of my case or anything from the trustee about my '05 tax refund.
Your case is VERY tricky. I will tell you that if the IRS rules against you (which I don't think is terribly likely...but I can't say for certain one way or the other) that you will be responsible for paying back the excess refund that you received. That means any money that you give/gave to mom, plus any money the trustee takes. Therefore I strongly recommend that you stick that money in the bank and don't touch it until you are sure what is going to happen. That may take a VERY long time.

If mom has filed a paper return (which is what a tax preparer would advise her to do) then she will get her refund and it will be late in the year before the IRS even begins to investigate the case to determine who really gets the exemption.
 

Who's Liable?

Senior Member
This post was answered awhile ago with the same exact answers...

I guess some people will not stop until they get the answers they want to hear...
 

seniorjudge

Senior Member
Who's Liable? said:
This post was answered awhile ago with the same exact answers...

I guess some people will not stop until they get the answers they want to hear...
Yep, this poster is a cereal poster...we need to crack his grape nuts.
 

mcwjjm

Member
Nut Crackers

I may have made a similar post but I don't believe that addressed the specific question on who's ruling utimately takes precedence; the IRS or the local trustee.
 

mcwjjm

Member
Reply 2 LdiJ

Thanks again. I have received my refund but wasn't going to give anything to Mom untill the Chapter 7 was discharged and closed. Now that she's contesting the return I definately won't be turning any of the refund over, and like you say that may take a very long time to shake out. Till then it sits in my account drawing interest.
 

Ladynred

Senior Member
Actually, when it comes to bankruptcy even the IRS must bow to the bankruptcy court. IF the trustee demands that refund, the IRS doesn't have a whole lot to say about it. It will be forfeited and distributed to your creditors and you would have ample proof of that in your bankruptcy proceedings. Since you were not married to this woman, the trustee could care less as far as he/she is concerned its YOUR refund.

I would, however, suggest you ask a taxpayer advocate about it.
 

mcwjjm

Member
The mother called and said he didn't file her return afterall. And we worked out an agreement to split it with her getting 65%. I feel the IRS would side with me but like Lidj said it's going to take a long time to get that resolved, and in the mean time we could use the money. I told her about having to wait and see what [if anything] the trustee does about the refund. My attorney confirmed [again] on Monday that since the trustee didn't ask for a copy of the 2005 tax return and said I didn't have to hold the refund that we're not obligated to forward it to him. Though I did fax my attorney a copy.
 

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