Can the judgment creditor get the joint tax refund?

[natasha89]

What is the name of your state? Florida

In GIBSON v. WELLS FARGO BAN, 255 So.3d 944 (2018), in which the court explained "the Gibsons were entitled to a rebuttable presumption that the tax refunds were TBE property. ... Whether the refunds were related to Mr. Gibson's economic activity, alone, is irrelevant." https://www.leagle.com/decision/inflco20180713213


I am a judgment debtor and I filed 2021 tax returns jointly with my husband, and expecting to receive a tax refund check, from IRS, on both of our names. The entire refund is based on my 2021 earnings or withholdings only: my husband has no income in 2021. Once we deposit that IRS tax refund check in a tenancy by the entirety (TBE) bank account then will the judgment creditor can get that money? Your response is greatly appreciated.

 

[FlyingRon]

If you maintain your bank accounts, then yes the tax return deposit will be protected against a judgment solely against one of the spouses. You'd best verify your bank accounts are held that way. It's not inherent in just listing a married couple's names and not all Florida banks will even do them.

 

[natasha89]

The GIBSON v. WELLS FARGO BANK, 255 So.3d 944 (2018) case I sighted is entered by 2nd district court of appeal of Florida in 2018, and I did not see any other judgment form any other appeals court in Florida (or supreme court of Florida) on this matter (except from some bankruptcy court judgments prior to 2018: different bankruptcy courts gave different judgments,a s explained in GIBSON v. WELLS FARGO BANK itself).

Therefore, is it safe to rely on the above judgment? My case comes under the jursdiction of 3rd district court of appeal of Florida.

 

[adjusterjack]

No, it's not "safe."

Once the bank is served the court order levying the account, it must obey it and freeze the account. There's a waiting period during which you'll have to get a court order unfreezing the account or segregating the funds. You aren't likely to know how to do that without a lawyer. Count on spending $1000 on a lawyer. Meantime, your checks bounce and you incur all sorts of fees while you have no access to your money.

Take precautions before that happens.

 

[natasha89]

I will take precautions, thank you. I am not concerned about freezing the account and waiting period, and I can manage that with an attorney if necessary.

My concern in asking "safe" is whether that joint tax return will be treated as TBE by the 3rd district court also, due to the reasons I mentioned in my most recent email.

 

[zddoodah]

will the judgment creditor can get that money?

"Will" and "can" are two different questions. The former is unanswerable, and the answer to the latter is yes, possibly.

Therefore, is it safe to rely on the above judgment?

I'm not sure what this means. This question appeared below a paragraph in which you described an appellate decision. While I'm not going to take the time to confirm, I have no reason to believe the cited case isn't good law and doesn't stand for the proposition for which you cited it.

My case comes under the jursdiction of 3rd district court of appeal of Florida.

Appellate decisions are not only valid in the district in which they were entered.

One thing to keep in mind is that you said the case you cited said the debtor is entitled to a rebuttable presumption of TBE property. That's great, but that means the creditor could seek to rebut the presumption.

If you're getting significant tax refunds, you might want to adjust your withholding on your paycheck to avoid that.

 

[FlyingRon]

It would depend how aggressive the people pursuing the judgement is. TBE assets are restricted. They might argue you're hiding wages that would be subject to garnishment if they haven't already hit the cap on doing those elsewhere (that's an example of the rebutting that might happen).

 

[natasha89]

Thanks a million!!!

 

[natasha89]

I read one more time the case law https://www.leagle.com/decision/inflco20180713213 . It contains the following language

We agree. Under Florida law, the Gibsons were entitled to a rebuttable presumption that the tax refunds were TBE property. See Beal Bank, 780 So.2d at 57 (recognizing that "strong[] policy considerations favor allowing [a] presumption in favor of a tenancy by the entireties when a married couple jointly owns personal property"). They demonstrated their intent to receive the refunds as TBE property by filing amended joint tax returns and receiving joint refund checks. Whether the refunds were related to Mr. Gibson's economic activity, alone, is irrelevant. See Newcomb, 483 B.R. at 558. They then deposited the checks into their joint bank account. In our view, their actions created the rebuttable presumption. See § 655.79(1), Fla. Stat. (2014); see also Beal Bank, 780 So.2d at 58 ("[W]e hold that as between the debtor and a third-party creditor


The case law appears to me that the TBE presumption can be rebutted if and only if the couple does not file joint tax returns or when the refund check from IRS is not deposited in a TBE bank account (or some action that violates TBE nature of the tax return/refund). The case law does not say anything on the upper limit on the refund amount or why the money was withheld. Therefore, it does not appear that the rebut is based on how much salary was withheld by the employer (FYI: in the above case, the tax refund was around 2 million dollars, a significant amount) or why it was withheld.

The above case has the following relevant details also:

In December 2009, Wachovia Bank sued Mr. Gibson for breach of a promissory note that he, alone, executed in March 2008. The parties stipulated to the entry of a final judgment in favor of Wachovia for over one million dollars.


Following entry of final judgment, the Gibsons filed amended joint federal tax returns for tax years 2003 through 2006, seeking retroactive reduction in their tax burden. See American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, at § 1211, 123 Stat. 115 (2009) (amending section 172(b)(1)(H) of the Internal Revenue Code to extend the carryback period to up to five years for 2008 net operating losses incurred by an eligible small business). Based upon these returns, the Internal Revenue Service issued two tax refund checks; one in June 2011 and the other in April 2014. Each check was payable to both Mr. Gibson and his wife, Dr. Gibson. The refund checks totaled over two million dollars. The Gibsons deposited both checks into their joint account at SunTrust Bank. The parties agree that the Gibsons held the SunTrust account as TBE property.



Could you look into this additional information and provide some feedback on whether the presumption can be rebutted based on the amount of tax refund (i..e, based on how much salary was withheld by my employer in 2021) or why it was withheld?

 

[LdiJ]

Just as an FYI any money received back from the IRS is not a "return" it is a refund. The "return" is the document filed with the IRS (the 1040) to get the refund (or to determine a balance due). It can cause considerable confusion in some circumstances to use the word "return" when you mean "refund".

 

[natasha89]

(I am listing it correctly this time, thanks LdiJ)

I read one more time the case law https://www.leagle.com/decision/inflco20180713213 . It contains the following language

We agree. Under Florida law, the Gibsons were entitled to a rebuttable presumption that the tax refunds were TBE property. See Beal Bank, 780 So.2d at 57 (recognizing that "strong[] policy considerations favor allowing [a] presumption in favor of a tenancy by the entireties when a married couple jointly owns personal property"). They demonstrated their intent to receive the refunds as TBE property by filing amended joint tax returns and receiving joint refund checks. Whether the refunds were related to Mr. Gibson's economic activity, alone, is irrelevant. See Newcomb, 483 B.R. at 558. They then deposited the checks into their joint bank account. In our view, their actions created the rebuttable presumption. See § 655.79(1), Fla. Stat. (2014); see also Beal Bank, 780 So.2d at 58 ("[W]e hold that as between the debtor and a third-party creditor


The case law appears to me that the TBE presumption can be rebutted if and only if the couple does not file joint tax returns or when the refund check from IRS is not deposited in a TBE bank account (or some action that violates TBE nature of the tax return/refund). The case law does not say anything on the upper limit on the refund amount or why the money was withheld. Therefore, it does not appear that the rebut is based on how much salary was withheld by the employer (FYI: in the above case, the tax refund was around 2 million dollars, a significant amount) or why it was withheld.

The above case has the following relevant details also:

In December 2009, Wachovia Bank sued Mr. Gibson for breach of a promissory note that he, alone, executed in March 2008. The parties stipulated to the entry of a final judgment in favor of Wachovia for over one million dollars.


Following entry of final judgment, the Gibsons filed amended joint federal tax returns for tax years 2003 through 2006, seeking retroactive reduction in their tax burden. See American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, at § 1211, 123 Stat. 115 (2009) (amending section 172(b)(1)(H) of the Internal Revenue Code to extend the carryback period to up to five years for 2008 net operating losses incurred by an eligible small business). Based upon these returns, the Internal Revenue Service issued two tax refund checks; one in June 2011 and the other in April 2014. Each check was payable to both Mr. Gibson and his wife, Dr. Gibson. The refund checks totaled over two million dollars. The Gibsons deposited both checks into their joint account at SunTrust Bank. The parties agree that the Gibsons held the SunTrust account as TBE property.



Could you look into this additional information and provide some feedback on whether the presumption can be rebutted based on the reasons such as

(a). amount of tax refund (i..e, based on how much salary was withheld by my employer in 2021), (b). why it was withheld, etc? (i.e., related to the reason why the salary was withheld)

OR

(a). whether the couple filed the joint tax returns, (b). deposited the tax refund in TBE bank account, etc? (i.e., related to TBE aspects of the tax process)

 

[natasha89]

Please, could someone help me!

 

[Zigner]

You have been helped. You may be better served speaking to a lawyer who specializes in consumer debt.

 

[Hulu]

Is this Mel Gibson?

 

[quincy]

Is this Mel Gibson?

No.