Williamson v. Westby (In re Westby)
- Citation:
- Williamson v. Westby (In re Westby), Case No. 11-40986 (10th Cir. B.A.P. Feb. 4, 2013)
- Tag(s):
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- Ruling:
- Affirming the bankruptcy court, the Tenth Circuit BAP held that a Kansas statute exempting tax refunds attributable to the Earned Income Credit for bankruptcy debtors is constitutional. The BAP incorporated the bankruptcy court decision by reference and reasoned that because the Kansas exemption statute is a state rather than federal enactment relating to bankruptcy, there was no Uniformity Clause violation. Moreover, the BAP explained that there was no Supremacy Clause violation because the Trustee failed to demonstrate any express conflict between the Kansas exemption statute and the Bankruptcy Code or any implied conflict between the Earned Income Credit exemption and the language and goals of the Bankruptcy Code.
- Procedural context:
- The bankruptcy court for the District of Kansas concluded that the exemption statute did not violate the Uniformity and Supremacy Clauses of the United States Constitution and overruled the Trustee's objection. Trustee appealed to the Tenth Circuit BAP.
- Facts:
- Debtors filed a voluntary Chapter 7 petition on June 22, 2011. On Schedule C, the Debtors claimed as exempt the "Earned Income Credit" with a current value of "Unknown." The Earned Income Credit is a refundable credit that primarily benefits lower-income married couples and heads of households who have qualifying dependent children with the amount calculated as a percentage of his or her earned income. The Kansas statute allows bankruptcy debtors to claim an exemption for federal and state Eared Income Credit refunds. Kan. Stat. Ann. § 60-315 (West 2012). Thus, when Kansas bankruptcy debtors receive their Earned Income Credit refunds, their creditors cannot reach them. The Chapter 7 trustee objected to the Debtors' claimed exemption, arguing the Kansas bankruptcy-only exemption statute violates the Uniformity and Supremacy Clauses of the United States Constitution.
- Judge(s):
- Michael, Romero and Tallman, Bankruptcy Judges
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