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The Fourth Circuit and also the Primacy of Refund Offsets in…

Preparing for a revenue tax obligation reimbursement for tax obligation year 2013, the Copleys provided the reimbursement as a homestead exception on their personal bankruptcy timetable prior to submitting their earnings tax obligation return. The Copleys had superior government earnings tax obligation obligations for tax obligation years 2008, 2009, and also 2010; the tax obligation financial debt for 2008 and also 2009 was dischargeable in personal bankruptcy, while the financial obligation for 2010 was nondischargeable. The reduced court instance regulation is blended and also at times perplexing, in component since it consists of situations in which the IRS countered tax obligation reimbursements to tire financial debt as well as additionally instances in which the Treasury made TOP offsets to nontax financial obligation.

Earnings tax obligation reimbursement offsets have actually been a warm subject on Procedurally Taxing, particularly of late. Preparing for a revenue tax obligation reimbursement for tax obligation year 2013, the Copleys noted the reimbursement as a homestead exception on their insolvency routine prior to submitting their earnings tax obligation return. The Copleys had impressive government earnings tax obligation responsibilities for tax obligation years 2008, 2009, and also 2010; the tax obligation financial obligation for 2008 and also 2009 was dischargeable in personal bankruptcy, while the financial debt for 2010 was nondischargeable. The reduced court situation legislation is combined and also at times perplexing, in component since it consists of instances in which the IRS balanced out tax obligation reimbursements to tire financial obligation as well as likewise instances in which the Treasury made TOP offsets to nontax financial debt. The Bankruptcy Code’s automated keep regulation typically restricts balanced out versus prepetition financial debts; nevertheless, in 2005, Congress passed BC 362(b)( 26 ), an exemption that permits the IRS to counter a prepetition revenue tax obligation reimbursement versus a prepetition earnings tax obligation obligation.

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