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Question about Tax Refunds and Taxes owed.
Dear Friends:
I have a client who owes as an example 5K for 2006 taxes which were assessed
more than three years ago and return was filed and let's presume no intent
to defraud and not tax lien
He also owes 5K for 2007 taxes, and 5K 2008 taxes and 5K 2009 taxes.
In 2010 Client is due a REFUND of 2500. He filed this Tax return on April
15, 2011. As of that date, IRS did not give a refund, but instead applied
the 2500 in refund to the UNSECURED NON-PRIORITY TAXES for 2006.
Since this was done 10 days before the filing of the bankruptcy it seems to
me that this is a PREFERENCE as defined by Section 547
(b) Except as provided in subsection (c) of this section, the *trustee may
avoid any transfer of an interest of the debtor in property*--
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such
transfer was made;
(3) made while the debtor was insolvent;
(4) made--
(A) *on or within 90 days before the date of the filing of the petition*; or
(B) between ninety days and one year before the date of the filing of the
petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would
receive if--
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by
the provisions of this title.
SO IN A CHAPTER 7 Case the 2006 taxes would have been discharged. So They
should not have applied that refund to the UNSECURED NON-PRIORITY DEBT. But
it says the TRUSTEE can avoid. Can debtor avoid in a 13? Do I do letter
first asking them to apply the 2500 to the secured priority taxes then
object to claim because they don't include the credit?
Or is there some other obscure law lurking somewhere that I cannot see that
says its perfectly fine for the IRS to do this?
R. Grace Rodriguez, Esq.
OFF: (818) 734-7223
CEL: (818) 554-9922
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Dear Friends:I have a client who owes as an example 5K for 2006 taxes which were assessed more than three years ago and return was filed and let's presume no intent to defraud and not tax lienHe also owes 5K for 2007 taxes, and 5K 2008 taxes and 5K 2009 taxes.
In 2010 Client is due a REFUND of 2500. He filed this Tax return on April 15, 2011. As of that date, IRS did not give a refund, but instead applied the 2500 in refund to the UNSECURED NON-PRIORITY TAXES for 2006.
Since this was done 10 days before the filing of the bankruptcy it seems to me that this is a PREFERENCE as defined by Section 547
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