Hardy v. Fink (In re Hardy)

Hardy v. Fink (In re Hardy), Case No. 13-6029 (BAP 8th Cir., December 23, 2013 )
The BAP affirmed the ruling of the bankruptcy court that the fact that the additional child tax credit allowed under 26 U.S.C. 24 is available as a taxpayer for taxpayers whose income places them out of range for most public assistance benefits available to Missourians is a sufficient basis to conclude that such credit is not an exempt "public assistance benefit" under Missouri law.
Procedural context:
The debtor claimed exempt as a "public assistance benefit" under Mo.Rev.Stat. 513.430.1(10)(a), the portion of her 2012 federal income tax refund that was attributable to a "Child Tax Credit" allowed under 26 U.S.C. 24. The bankruptcy court sustained the trustee's objection to the debtor's claim of exemption and the debtor appealed.
The debtor filed a petition for relief under chapter 13 of the bankruptcy code. On her Schedule C, she claimed exempt, as a "public assistance benefit" under Mo.Rev.Stat. 513.430.1(10)(a), the portion of her federal income tax return that was attributable to a "Child Tax Credit" allowed under 26 U.S.C. 24. Because Missouri opted out of the federal exemption scheme, the BAP reviewed applicable Missouri law relative to the claimed exemption. Under Missouri law, a debtor may claim exempt "[a] Social Security benefit, unemployment compensation[,] or a public assistance benefit." Mo.Rev.Stat. 513.340.1(10)(a). The debtor relied upon the "public assistance benefit" for the claimed exemption. The BAP observed that the statute does not define "public assistance benefit". The debtor argued that the common meaning of the term "public assistance benefit" was any assistance that benefits the public. The BAP rejected that definition as overly broad and unsupported by any authority. Instead, the BAP looked to several well-recognized dictionaries to determine the term's plain and ordinary meaning. These dictionaries generally defined "public assistance" as government aid or benefits to the needy, aged, poor, disabled persons, or dependent children. The BAP then noted that the full Child Tax Credit of $1,000 per qualifying child is available to individuals whose modified adjusted gross income does not exceed the "threshold amount of $110,000 for married individuals filing jointly, $75,000 for unmarried individuals, or $55,000 for married individuals filing separately." The BAP concluded that such individuals cannot be said to be needy. Consequently, the BAP agreed with the bankruptcy court that the refundable portion of the Child Tax Credit is not a "public assistance benefit" within the meaning of Mo.Rev.Stat. 513.340.1(10)(a), and thus may not be claimed exempt under that statute. The BAP cited several cases which supported its conclusion.
Saldino, Nail, Shodeen

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