Zeek Receiver to send out claim funds withheld for tax
Back in October we covered an update from the Zeek Rewards Receivership regarding funds withheld for tax purposes.
Shortly after the Receivership announced that victim checks would be going out on September 30th, reports surfaced about 30% of payouts being withheld by the Receiver.
Clarifying why the funds were held back, the Receivership put out an update a few weeks later explaining that they were waiting on clarification from the IRS regarding potential tax issues.
I have heard from many of you that this withholding should not have been made because these distributions are not taxable. The tax laws on this issue are not entirely clear.
We have attempted to get a definitive opinion from the IRS but have not yet been able to do so. Given this uncertainty we acted on the side of caution and made the withholding.
As of the time of publication of this article, the Receivership still hasn’t heard back from the IRS. Why that’s taking so long I have no idea, but in the meantime the Receivership has decided to release the funds being held anyway.
Citing “a tax opinion from a professional”, the Receivership writes
As I have said before, so that we do not expose the receivership to potential fines and penalties that would dramatically decrease the amount of money available to those claimants eligible for a distribution, we have sought assurance from the United States Internal Revenue Service that no withholding is required.
We have not been able to get such assurance. However, I have received a tax opinion from a professional that persuades me that tax withholding is not necessary.
The Receivership will no longer withhold taxes from distributions paid to affiliates.
If the Receivership previously withheld taxes from a distribution, we will issue a new check on December 23, 2014 to distribute the previously withheld funds to that affiliate.
Other checks will also be reissued on this date, covering problematic checks sent out in the initial batch.
Oh and if you’re one of these 60,000 or so affiliates – what on Earth are you waiting for?
In late January 2015, we also will send distributions to those qualified affiliate claimants who completed the online claim allowance requirements after August 15, 2014 and have not yet received a check.
Somewhat frustratingly, there are nearly 62,000 affiliate claimants that have received a letter of determination but have not yet accepted (or objected to) the recognized claim.
We have the funds on reserve to make a distribution to all these claimants in the same manner we did for approximately 90,000 affiliate claimants in September. But, unless a claim is accepted (or has had an objection resolved) and the affiliate claimant completes the release and OFAC certification, a distribution check cannot be mailed.
I encourage all of these affiliate claimants to go online and complete the process to be eligible for a distribution check in late January 2015.
Thinking that Zeek might reopen or that accepting a claim might somehow incriminate you at this point is ridiculous. Settle the objections (no, you’re not getting your VIP monopoly money balance), complete the release and OFAC certification and collect at least some of your initial investment back.
One thing I’ll mention as an aside is that, to be perfectly honest, the “tax professional” line did sound a bit flimsy. Affiliates who receive payments don’t seem to be at any risk, but if the IRS turn around at a later date and fine the Receivership – there’s obviously going to be less funds to distribute out going forward.
Why the IRS are taking forever to answer the Receiver’s queries though is beyond me. I don’t know what the average turn-around time is for tax queries but it’s been what now, over six months and counting?
Starting to enter “beyond ridiculous” territory here…