Hardy v. Fink (In re Hardy)

No. 14–1181 (8th Cir. June 2, 2015)
Reversing the Bankruptcy Appellate Panel (BAP), the Court of Appeals for the Eighth Circuit held that a tax refund attributable to the federal Additional Child Tax Credit (ACTC) statute is a “public assistance benefit” under Missouri’s bankruptcy exemption statute. The court recognized that the term “public assistance benefit” was not defined by the Missouri statute and agreed that the dictionary definition of “government benefits provided to the needy” was appropriate. Applying that definition, the court concluded that the amendments to the Child Tax Credit and ACTC statutes over the years, and the legislators’ comments accompanying those amendments, reflected Congress’ intent to provide a benefit to low-income (or needy) families. The BAP, like other courts, focused too narrowly on the Child Tax Credit and the ACTC statutes as first enacted, without taking into account the amendments and the legislative purposes behind those amendments. Lastly, holding that the ACTC was a “public assistance benefit” was consistent with several other bankruptcy courts that had addressed the issue.
Procedural context:
The BAP affirmed the bankruptcy court and held that the ACTC did not constitute a “public assistance benefit” because non-needy families—those with modified adjusted gross incomes in excess $100,000—were potentially eligible for the credit. Additionally, the BAP noted that because the ACTC statute required recipients to meet a minimum earned income threshold, the “most needy” would not benefit under the statute.
The debtor claimed the majority of her 2012 tax refund as exempt and attributed $2,000 of the refund to the ACTC. She claimed that the credit qualified as a “public assistance benefit” under Missouri’s exemption statute. The trustee objected, and the bankruptcy sustained the objection. The debtor appealed.
Loken, Murphy, and Melloy, Circuit judges.

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