RSSIRS was not entitled to relief from stay to set off against tax refunds claimed as exempt.
Jul 06
The Internal Revenue Service (IRS) was not entitled, based on the equities of the case, to exercise a right of setoff, nor was it entitled to stay relief for purposes of setting off, against federal income tax bankruptcy dallas refunds in which the Chapter 13 debtor, without any objection by the IRS or request for an extension of time to object, had claimed a “wildcard” exemption. The IRS had not exercised these setoff rights before the debtor filed for bankruptcy and claimed the refunds as exempt. Moreover, the debtor had no homestead, so that the “spillover” amount of the “wildcard” exemption represented the most significant exemption available for the protection of the debtor and his family.
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