Cohen v. Borgman (In Re Borgman)
698 F.3d 1255
10th Cir.2012Background
- This appeal concerns whether the amount of a federal tax refund equal to the nonrefundable portion of the child tax credit (CTC) is exempt under Colorado law, Colo. Rev. Stat. § 13-54-102(1)(o).
- Colorado has opted out of federal exemptions; exemptions are governed by Colorado law, including refunds attributed to a CTC.
- The CTC is a $1,000 nonrefundable credit per qualifying child; a portion may be refundable as the Additional CTC.
- Refunds arise only if tax payments and refundable credits exceed total tax; nonrefundable CTC does not by itself create a refund.
- Debtors Dunckley and Borgman filed Chapter 7 cases in 2009 and claimed refunds as exempt; the Trustee objected; the Bankruptcy Court denied the exemptions; the BAP reversed; the Trustee appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 13-54-102(1)(o) covers refunds attributed to the CTC, including its nonrefundable portion. | Dunckleys argued the full amount refund attributed to the CTC is exempt. | Estate exemptions cover refunds; nonrefundable CTC is part of the credit and yields a refund. | No; statute covers refunds only, not the nonrefundable portion. |
| Whether the disputed refunds were actually “attributed to” the CTC for exemption purposes. | Refunds are attributed to the CTC because the credit affects the refund. | Refunds must be attributable to the credit itself as a component; nonrefundable portion does not generate a refund. | No; refunds depend on multiple factors; they are not exclusively attributable to the nonrefundable CTC. |
Key Cases Cited
- Kokoszka v. Belford, 417 U.S. 642 (U.S. 1974) (income tax refund treated as property of the estate; broad definition of property)
- Barowsky v. United States, 946 F.2d 1516 (10th Cir. 1991) (pre-petition portion of a federal tax refund is property of the estate)
- Dye v. United States, 121 F.3d 1399 (10th Cir. 1997) (overpayment concept; refunds arise only when an overpayment exists)
- Jones v. Liberty Glass Co., 332 U.S. 524 (U.S. 1947) (overpayment meaning as any payment in excess of due amount)
- Belcher v. Turner, 579 F.2d 73 (10th Cir. 1978) (state-law interpretation of exemptions; ascertain legislative intent)
- In re Hodes, 402 F.3d 1005 (10th Cir. 2005) (state-law exemption scope; application to tax-related refunds)