Tag: tax refunds

N.C. Business Court: Bass v. NC Dept. of Revenue- Statute of Limitations for Tax Refund

Summary:

Mr. Bass filed his 2012 federal tax return electronically, but unintentionally failed to file his state return. In July 2016, the North Carolina Department of Revenue (“NCDOR”) sent Mr. Bass a Notice of Intent to Assess for Failure to File North Carolina Return (“the Notice”) and then Mr. Bass filed his 2012 return on August 4, 2016, contending a refund was due. The NCDOR denied the refund, as the return was beyond the 3-year statute of limitations. Mr. Bass sought review with the Office of Administrative Hearings (“OAH”) and after it ruled in his favor, holding that while N.C.G.S. § 105-241.8(a) provides as 3 year limit on seeking a refund, N.C.G.S.… Read More

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Bankr. M.D.N.C.: In re DeCoro USA, Ltd.- Determination of Tax Refund under 11 U.S.C. § 505

Summary:

Following City of Perth Amboy v. Custom Distrib. Serv., Inc. (In re Custom Distrib. Serv., Inc.), 224 F.3d 235, 243-44 (3d Cir. 2000), the bankruptcy court held that a Debtor must “must have properly requested [a] tax refund … in order for [a bankruptcy] court to have the jurisdiction to determine and order the payment of such refund.” The Debtor applied for a tentative carry back adjustment to the IRS pursuant to 26 U.S.C. § 6411, by completing Form 1139. This, however, did not constitute a claim for a refund sufficient to “vest the [court] with jurisdiction to order the payment of a refund.” Instead a corporate tax payer must make a formal claim for a tax refund using Form 1120 (X).… Read More

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Law Review: Gross, Notowidigdoz and Wang- Liquidity Constraints and Consumer Bankruptcy: Evidence from Tax Rebates

Abstract:

This paper estimates the extent to which legal fees prevent liquidity-constrained households from declaring bankruptcy. To do so, it studies how the 2001 and 2008 income tax rebates affected consumer bankruptcy filings.  The authors exploit the randomized timing of the rebate checks and estimate that the rebates caused a significant, short-run increase in consumer bankruptcies in both years, with larger effects in 2008 when the rebates were more generous and more widely distributed. Using hand-collected data from individual bankruptcy petitions, the authors document that the rebates caused an increase in the total liabilities and debt-to-income ratios of filers.

Summary:

It is unlikely that many consumer bankruptcy attorneys would be surprised by a finding that the receipt of  tax refunds often increases the filings of Chapter 7 bankruptcies. … Read More

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