Economic Stimulus Act of 2008 The IRS recently began issuing stimulus payments to qualified individuals under the

Economic Stimulus Act of 2008. In deciding whether to seek turnover of the stimulus payment in any case, trustees should consider all relevant circumstances. These circumstances include: the amount of the stimulus payment; any interest of a non-debtor spouse in the stimulus payment; the cost to the estate of recovering and administering the stimulus payment, including litigation with debtors who may seek a judicial determination; the extent to which recovering the stimulus payment will enable creditors to receive a meaningful distribution; and the applicability of state and federal exemptions. We are informed that the IRS’s legal interpretation is that no portion of the stimulus payment would become estate property in a case filed on or before February 13, 2008, the enactment date of the Stimulus Act. The IRS also asserts that in any case filed after February 13, 2008, the debtor’s entire stimulus payment would become estate property (subject to any right of offset). Any chapter 7 trustee who deems it appropriate to seek to recover from the IRS a stimulus payment that has not already been paid to the debtor should use the same IRS procedures as are used to request a turnover of an income tax refund from the IRS. The United States Trustee Program will not seek to compel a trustee to recover stimulus payments that the trustee, in his or her discretion, decides not to recover in light of all relevant considerations.

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