Posts Tagged ‘Tax Refund’

Tax Refund Scam, 14 Indicted

Financial Reviews | Posted by Kiara Withers
Sep 27 2011

In what is shaping up to be the biggest tax refund fraud case in Missouri, 14 individuals from across the country have been indicted for allegedly cheating the IRS of millions of dollars in false tax claims. In her comments on the case, US Attorney Beth Philips said, “Kansas City was the hub of a nationwide conspiracy that attempted to receive nearly $100 million in fraudulent tax refunds”. The alleged leader of the scheme hails from Kansas City and was identified as Gerald A. Poynter II, also known as ‘Brother Jerry Love’.

Assistant US Attorney Dan Nelson described Poynter’s alleged role as the “center hub and spoke” of the fraudulent scheme that spanned the nation. The indictment revealed the modus operandi in the conspiracy. It stated that Poynter and his associates would bring in taxpayers who wished to reduce their tax obligations, promising them a way to do so if they agreed to allow Poynter to prepare their tax returns for them. Naturally, many agreed to this proposal.

Upon being hired, Poynter and his associates would allegedly prepare these tax returns as though they were owed large amounts in refunds from taxes withheld from interest income. Sometimes, these refund claims could reach up to a million dollars. Then the cons

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Tags: Indicted, Tax Refund
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Using Your Tax Refund to Pay Credit Card Bills

Financial Tips | Posted by Jacob ONeill
Apr 15 2011

So Uncle Sam’s sending a big tax refund your way. Oh, the things you can buy! Will it be a home theatre system? A flat-screen TV? The newest smart phone?

Hold up there, before that phone looks smarter than you. What we’ve been seeing recently is a lot of people with credit scores as healthy as we are, but who are showing early signs of bad credit card debt.

Is your credit exhibiting symptoms of poor health? If it is, put that big tax refund to work making it well again.

It’s easy to self-diagnose the onset of bad credit card debt if you know where to look. Are all your credit cards at or near their limits? If so, your credit may be starting to feel weak. Credit agencies — and credit issuers — like to see that you still have some credit left, after all. And if you’re having problems making the minimum payments — especially if you find yourself paying for one card with another card — your credit could be calling in sick very soon.

Your credit may also be under the weather if you use your cash to pay your minimum payment, then have to go right back to the card to pay for necessities. And what about savings? Do you have enough left over to put a little away? Experts generally say you should save at least 10 percent of your earnings.

These credit bugs often arrive together and are nearly impossible to cure quickly once they gang up. So if you find

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Tags: Refund, Tax Refund
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Chapter 7 Bankruptcy Treatment Of Tax Refund From Exempt Income Sources

Financial Guide | Posted by Kiara Withers
Dec 22 2010

Bankruptcy trustees will target debtor’s income tax refunds. Tax refunds provide immediate cash available for distribution to creditors as opposed to other assets, such as cars, which have to be stored, noticed for sale, and liquidated at auction with commissions due.

One of my bankruptcy clients is expecting a significant tax refund. He stated that all his income in the past year was in the form of distributions from a qualified pension plan and social security. Proceed from pensions and social security distributions are exempt under Florida law after they money has been distributed to the recipient debtor. My client wants to know if his tax refund representing taxes withheld from pension and social security distributions is exempt in Chapter 7 bankruptcy.

I have never seen a case on this issue, and the issue has not come up before in any of my previous bankruptcy cases. In my opinion, the tax refund would not be exempt. Money from pensions and social security in a debtor’s financial account is exempt only if the debtor can trace the funds in his financial account to pension or social security distributions. It is difficult for a debtor  to trace pension and social security funds after the money has  been commingled with money received from non-exempt sources. The debtor’s tax refund has been commingled with other money in the U.S. treasury. The IRS

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Tags: Income, Tax Refund
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Chapter 7 Debtor Defers Income Tax Refund And Protects The Money From His Bankruptcy Trustee

Financial Guide | Posted by Kiara Withers
Oct 13 2010

A Chapter 7 bankruptcy debtor’s tax refund is non-exempt and is part of the bankruptcy estate. Except that a Florida bankruptcy attorney told me about a case in another district  where the bankruptcy debtor may have beaten ths system. The debtor filed his federal income tax return as he was preparing for Chapter 7 bankruptcy. He realized he would be eligible for a significant tax refund which would be lost to the trustee. So, when the debtor filed the tax return he check the box authorizing the IRS to apply the tax refund to future year’s tax liability. When he filed bankruptcy, the trustee demanded the tax refund. The debtor replied that he was expecting no refund. The issue went to court and was appealed all the way to the circuit court of appeals.

The appellate court ruled for the debtor. The court said the debtor had no right or ability to claim and turnover the tax refund because under the Internal Revenue Code the debtor/taxpayer’s election to defer the refund is irrevocable. Because the debtor had no right under the tax law to reverse his election and get the tax refund, so the trustee had no right to seek its turnover.

If you plan to file Chapter 7 bankruptcy before you file your 2010 tax return, and you are entitled to a significant refund,  you should tell the IRS not to send the refund and apply the amount to your future taxes. The trustee will not be pleased, but there is legal authority to back up your position. Graves No. 08-1462

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Tags: Financial Guide, Tax Refund
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Protecting Your Tax Refund If You Haven’t Filed For Bankruptcy Yet

Financial Guide | Posted by admin
Jan 29 2010
 
This post is part of a series of articles this week addressing every aspect you will need to know about filing bankruptcy, protecting tax refunds and related issues.  To see all posts in this series to date, click this link:  Tax Refunds and Bankruptcy  .
 
What Should You Do If You Expect a Large Tax Refund, But Haven’t Filed the Bankruptcy Petition Yet?
 
TIP:  Here’s where pre-bankruptcy planning becomes very important.  If you expect a large refund, you may want to delay the filing of your bankruptcy petition until you receive the refund and spend it down in an appropriate manner.
 
Using a large tax refund to pay your rent or mortgage, buy food, make a car payment, or even pay your bankruptcy attorney, are all types of payments that are consistent with filing for bankruptcy in good faith.  Sometimes the refund can also be used to buy necessary clothing or furniture, fix your house, repair your car, or get necessary dental work done.
 
However, you cannot pay existing debts to friends or relatives, give the money away, gamble it away, or buy luxury goods.  In general, using it to pay any reasonable and necessary expenses is O.K.
 
Since pre-bankruptcy planning can be tricky in order to do it in a way that complies with the bankruptcy law, it is always best to seek the advice of a competent bankruptcy attorney before doing so.
 
Exempting the Tax Refund in the Bankruptcy Petition
 
If you need to file your bankruptcy petition before you recieve the refund, you must list it in the petition.
 
To protect your tax refund, you must exempt it by including it as an asset in the Schedule B, which is the Schedule of Personal Property, by stating the anticipated amounts of both the Federal and State refunds, and by listing the exemption and the correct exemption statute (New York C.P.L.R. section 5206) in Schedule

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Tags: Financial Guide, Tax Refund
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