Overpaid Taxes Need Not be Turned Over to the Estate Under Section 542(a)
By: Christopher J. Rubino
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
In Weinman v. Graves (In re Graves)[1], the Tenth Circuit held that section 542(a)[2] does not permit a chapter 7 trustee to force the IRS to turnover overpaid taxes of joint debtors where the debtors elected to apply the overpayment to the next year’s tax liability. In Graves the joint debtors elected to apply their 2006 tax refund to their 2007 tax liability.[3] Two months after filing their tax returns, the debtors filed for bankruptcy.[4] The Tenth Circuit affirmed the bankruptcy court’s refusal to order the IRS to turnover the debtors’ 2006 tax refund under section 542(a).[5]