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Collections/Delinquent Accounts
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Why did Treasury keep my income tax refund when I'm in bankruptcy?
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Answer:
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Treasury's ability to withhold a taxpayer's income tax refund is
determined by the chapter under which the bankruptcy was filed:
- Chapter 13--Income tax refunds are returned to taxpayers.
- Chapter 7--The refund is held until a discharge is issued.
- Chapter 11(business filed bankruptcy)--Treasury will apply corporate officer
refunds to the business debt.
- Chapter 11(corporate officer filed bankruptcy)--If a plan has been confirmed
and there are post-confirmation debts, Treasury will apply corporate officer
refunds to post-confirmation assessments.
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