05 Mar 2013

Tax Refund Tips and Techniques

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Trustee Tip:

Make Tax Season more Profitable by uncovering more Tax Refunds

Did you know that Tax Refunds make up a significant portion of the assets that most trustees collect within each estate? The pre-petition portion of the tax refund is considered part of the estate and is collectable; the post-petition amount is not.

Cases filed at the beginning of a new year produce the best tax refunds.  First, trustees typically can obtain the largest amounts: the full refund of the prior year.  Second, they have the best chance of getting the refund before the debtor spends it.

In order to best prepare your collections of tax refunds, we have compiled a list of tips and techniques to help you get the most out of this tax season:

1)      Determine which cases may have tax refunds. Several methods may be used in CaseLink Office and CaseLink Web to do this quickly – see details below.

2)      Notify the IRS to send the tax refund to you instead of the debtor. The “Tax refund Turnover Letter”, located under Reports/Case,  gives you a tool to redirect the checks directly to the estate, intercepting the money from the debtor.

Tax Refund Turnover Letter in CaseLink Office

3)      Request the tax refund from the debtor. If the tax refund has already been sent to the debtor, you can still ask the debtor for the portion that is due to the estate. 

Using SnapShots

Users can create a Snapshot that displays all open cases with remaining values on assets using UTC codes 1124 (scheduled tax refund) and 1224 (not originally scheduled tax refund).

You can create a report to see the cases you have flagged for Tax Refunds using snapshots:

1)      Open Snapshots

2)      Choose the Tax Refund Tracking Snapshot (needs to be installed by your Account Manager)

3)      On the window that pops up, choose the attention line reason (i.e. 2012tax refund)


4)      Now you have a report showing all of the cases in your system that you have flagged for Tax refunds in 2011

SnapShots in CaseLink Office

You can also use the SnapShots report to merge letters to everyone on the list.

Find the cases requiring a letter to the debtors (using Snapshots) and then merge the letter:

1)      Click on Accessories/ Mail Merge

2)      Click on “Select Cases” on line 1

Mail Merge

3)      Snapshots will open.

a)      Click on the first line beside “Case Selection” and choose “Tax Refund Tracking”

b)      Then, on the window that pops up, choose your “Attention Line” reason in the drop down (i.e. 2012 Tax Refund).  Click OK.

c)       Now Snapshots will show you a list of all the cases that meet the criteria.

d)      Click Select on the bottom right of the window.


4)      Now you are back to the CaseLink Merge window (shown above).

5)      Click on the ellipses button on line 4 and browse to your document (i.e. WPDocs/ BMS Custom Merge/ 2012 Tax Refund Letter).  (Contact your Account Manager if you need a letter coded for merging).

6)      Select the correct letter.

7)      Now you are back to the CaseLink Merge window.

8)      Click Merge.

9)      Your word processing program will open with a file including a letter to each of the debtors on the Snapshots report.

 Using Tasks

Some users enter a task on each case with a Pending Tax refund.  This can be helpful, with Weekly Task and Overdue Task notifications displayed on the Home Page.

Example:  Go to Case, Tasks and enter a Task called “Pending Tax Refund”.  It is a good idea for sorting purposes to give these similar tasks the same Priority (such as High).  Then, these Tasks can be viewed and sorted from the Tasks report.

 Additional Tips for Managing Tax Refund Cases:

Using the IRS Refund Turnover Report: Go to Reports, Case and choose IRS Refund Turnover Report.  Complete the fields required for calculations, then Merge.  This report notifies the IRS that the case is in bankruptcy, and documents in worksheet format the calculations estimating the estate funds.

Estimate Flag: This option allows the trustee to display the word “Estimated” next to the tax refund field.

Troubleshooting Tips

  1. Make sure the tax year is for prior year for correct calculations.
  2. Do not change the Julian dates within the merge template.

Hopefully these tips and techniques will help to make this tax season a more profitable one for you. If you have any questions or concerns regarding the steps shown please feel free to contact the BMS Support Center via email or call 800-634-7734, ext. 6.