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Tax Refunds Adjusted and Made Uniform Across Central District of California with Chapter 13 Plan Form Effective December 1, 2017

Every Chapter 13 client is required to provide a copy of their tax returns to both counsel and the Chapter 13 Trustee to analyze any changes and to account for any post-petition tax refunds that the client received or will receive.

The rule prior to December 1, 2017, varied in different jurisdictions, with some allowing clients to keep no refund and others allowing up to $1,500.  

The new rule, effective as of December 1, 2017, is that clients will get to keep a net refund of up to $500 before having to turn additional refund amounts over to the Chapter 13 Trustee.  The "net refund" means that if you have a $2,000 State Tax Refund, but you owe the Internal Revenue Service $1,500, you will have a net of $500 in which you will be able to keep the entire amount.