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Chapter 13 Could Affect Your Income Tax Refund

Posted on July 15th, 2014

Tax season comes every year, but the real work for the IRS begins as April 15 creeps closer and the flood of last-minute tax returns hits the system for processing. Arizona taxpayers who file an error-free return should get a refund within 21 days. There might be a delay in processing the refund if the IRS selects the return for review or if the filer is in a Chapter 13 bankruptcy.

Taxpayers have the ability to check their refund status online at the official IRS website by clicking on the refunds tab at the top of the home page. Status updates are available every 24 hours, but taxpayers using the service must know the exact amount of their refund in addition to their Social Security number and filing status.


Taxpayers who have not filed tax returns for prior years or who owe money to the government for back taxes, child support arrears or unpaid student loans will probably not receive a tax refund. Federal law allows the IRS to hold the refund until all tax returns are filed, or it can apply the refund toward the unpaid debts.


Those taxpayers who seek debt relief by filing for Chapter 13 before their income tax refund is processed might not receive a check from the IRS. Tax refunds for consumers who are in a Chapter 13 might be sent to the bankruptcy trustee depending upon the prior arrangements the consumer made with the trustee.


Arizona consumers who filed Chapter 13 bankruptcy when they were entitled to a tax refund from the IRS could speak to a Phoenix bankruptcy lawyer to ascertain whether the refund belongs to the trustee or the consumer. This could avoid problems for a consumer in bankruptcy who receives a refund check that should go to the trustee.


Source: Fox Business, “Where’s my refund?,” Bonnie Lee, March 21, 2013


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