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 accepti

🤖 Quick Answer

What was the reason for the 30% withholding on Zeek Rewards victim checks distributed in September?
The Zeek Rewards Receivership withheld 30% of victim payouts pending IRS clarification on potential tax obligations. The Receivership sought definitive guidance on whether distributions qualified as taxable income, adopting a cautious approach due to unclear tax law applicability to receivership disbursements.

Why did the Receivership maintain the cautious stance on fund withholding despite victim claims?
Although many victims argued distributions were non-taxable and withholding was inappropriate, the Receivership prioritized legal compliance. Unable to obtain definitive IRS guidance on the tax treatment of receivership distributions, they maintained conservative protocols to ensure proper handling of funds pending official clarification.

🔗 Related Articles

- Paul Burks files criminal trial brief
- Icanget2 Review: Send messages via an app? Tell me more!
- Review of Vemma’s revised compensation plan
- Talk Fusion terminate top ranked affiliates, lawsuit filed
- USFIA Receiver recovers $20.4 million