Tax Returns & Refunds

Tax Returns and Refunds While
in a Tucson Chapter 13 Bankruptcy

Every year while in bankruptcy, a chapter 13 debtor must provide the trustee a copy of their tax returns. Within 14 days of filing the state and federal return, the debtor must send a copy of each to Dianne Kern’s office in which all Social Security numbers, minor children names, birthdates, bank account numbers and bank routing numbers are redacted (white-out, deleted, removed, not visible). This requirement is based on statutory law, and if the returns are not provided to the trustee, the case will absolutely be dismissed. Really, your case will be dismissed!

Mail copies to:      Dianne C. Kerns, Trustee, 7320 N. La Cholla Blvd. # 154, P.M.B. #413, Tucson, AZ 85741

Email copies to:

Submitting Tax Refunds ($). With tax refunds, the debtor is allowed to keep the first $1,000. Any amounts over this must be turned over to the bankruptcy estate as an additional payment. This means that creditors get an additional amount of money, beyond what might have been projected with the plan (unless the plan is already calculated at a 100% repayment). This might be a little confusing.

For example, if a debtor receives a state and federal tax refund in the amount of $1,873, the debtor must make an extra plan payment of $873. To avoid making extra payments, debtors should adjust their tax withholdings to get a projected refund of $1,000 or less. Refund portions that exceed the $1,000 threshold do not belong to the debtor and per the plan and case law, the debtor is court ordered to turn these funds over to the estate.

If you receive a check directly from IRS or Arizona Department of Revenue, make sure to endorse the check before mailing it to the payment address. Alternatively, if you have had your refunds directly deposited into your account, you will need to send certified funds (cashier’s check or money order). If only including one check, make sure to specify how much of the check is for your federal refund and how much of the check is for your state refund.

Each year while in a chapter 13 bankruptcy, please SEND YOUR TAX REFUNDS TO:

Dianne C. Kerns, 7320 N. La Cholla Blvd. # 154, P.M.B. #413, Tucson, AZ 85741

Alternatively, you can submit the tax refund payment through . You will need to mark the payment as tax refund (there will be a drop down option for this).

In some scenarios a debtor cannot avoid a large tax refund. For example, a debtor might receive large tax refunds based on earned income credits. In these types of cases, we preemptively offer the refund as part of the plan payment, which strategically keeps the monthly payment low. In these cases, the debtor should know their plan and anticipated calculation. When in doubt, use the DNC website to see what amount was projected to be surrendered.