*1 judgment allowed the Trustee to re- are AFFIRMED. The Court will issue cover the full amount Registry separate final Order.
($129,897.33). Contrary to Appellants’ ar- however, gument, the Trustee specifically requested in original Complaint to re-
cover premium “plus and in interest” the First Complaint Amended to recover ” “the funds from the registry Court’s .... See Complaint 4; # [BR Doc. at First 1] Ralph KIMBRO, re Hartford Complaint Amended # Jr. and [BR at 42] Doc. 5. Kimbro, Patricia Ann Debtors. Appellants argue alternatively that the recovery Trustee’s should be limited to the Henry Hildebrand, III, E. premium payment plus the statutory inter- Trustee, Appellant, 3.20%, $113,051.94. est rate of for a total of v. Appellants claim are entitled to Ralph Kimbro, Hartford Jr. And $16,845.39. remaining Although the Kimbro, Patricia Ann Trustee stated during the adversary pro- Debtors-Appellees. ceeding that he was entitled recover prejudgment rate, interest at statutory BAP No. 07-8052. the Trustee did not limit recovery its United States Bankruptcy Appellate Panel and, indeed, that amount clearly requested of the Sixth Circuit. in the First Amended Complaint that it receive “the funds from regis- the Court’s Argued: Feb. 2008. try.” Decided and Filed: June The Trustee sought to pre- recover mium payments transfers, as fraudulent
plus accrued interest. There nothing the record to indicate that the funds in the Registry
Court’s represented anything other than the fraudulent plus transfers the interest that accrued before and after
they were deposited into Registry. The amount judgment represented
that amount and is affirmed.
IV. AND CONCLUSION ORDER
The Bankruptcy Court’s decision is cor- rect and is affirmed in all respects. Ac-
cordingly, it is hereby
ORDERED the Bankruptcy Court’s December 2007 “Memorandum Opinion on Trustee’s First Amended Com- plaint” and Regarding “Order Trustee’s
First Amended Complaint” Doc. # [BR 56]
I. JURISDICTION AND STANDARD
OF REVIEW
The Bankruptcy Appellate Panel of the *3 jurisdiction Sixth Circuit has to decide this appeal. The United District States Court for the Middle District of Tennessee has appeals authorized BAP. A final order of a bankruptcy may ap- court pealed right 28 U.S.C. 158(a)(1). § purposes For appeal, an “ order is final if it ‘ends litigation the merits and leaves nothing for the court ” to do but execute the judgment.’ Mid- States, land Asphalt Corp. v. United 794, 798, 1494, 1497, U.S. 109 S.Ct. (1989)(citations omitted). L.Ed.2d 879 The appeal issue on is whether a may debtor claim the “vehicle ownership expense” on the means test form for a vehicle that is not encumbered subject debt or to a lease. This is a ARGUED Henry AND ON BRIEF: E. legal issue which is de novo. reviewed See Hildebrand, III, Office of the Chapter 13 (In Nicholson v. Isaacman), Isaacman re Trustee, Nashville, Tennessee, for Appel- (6th Cir.1994). 26 F.3d “De novo lant. review requires the Panel to ques review ARGUED AND ON BRIEF: Mary tions of independent law of the bankruptcy Ausbrooks, Elizabeth Washington, Clark & court’s determination.” First Union P.C., Nashville, Tennessee, for Appellees. Mortgage (In Corp. v. Eubanks re Eu banks), (6th 219 B.R. BAP Cir. FULTON, RHODES, Before: 1998) (citation omitted). SCOTT, Bankruptcy Appellate Panel Judges. II. FACTS The facts of this case not in dispute.
OPINION The Kimbros filed a voluntary chapter 13 bankruptcy petition on June RHODES, STEVEN Bankruptcy Their yearly income exceeded the state Appellate Judge. Panel median income for a family of their size. appeal requires This the Panel to decide objected trustee chap- the Kimbros’ whether in the means test of 11 U.S.C. ter plan, asserting that it did not com- § 707(b)(2)(A)(ii)(I), a debtor deduct ply 1325(b). with 11 U.S.C. an “ownership expense” a vehicle that 1325(b) provides: Section subject to neither secured debt nor a lease. For herein, the reasons stated If the trustee holder an allowed Panel concludes that the debtor is entitled objects unsecured claim confirma- to that expense deduction and affirms tion plan, of the then court may decision of the bankruptcy court. approve unless, plan as of the effec- pro- income” to unsecured creditors plan plan disposable tive date — ... 22C, projected all of on Form the Kimbros de-
vides that
the debtor’s
because
disposable income to be received
for a
ownership expense
ducted a vehicle
beginning
period
commitment
vehicle for which
were not
second
is due
date that the first
on the
any
did not
payments.
indebted and
make
to make
plan
applied
under the
will be
support
of this
the trustee
argument,
creditors under
payments
unsecured
Manual,
relies on the Internal Revenue
plan.
(“IRM”),
Analysis
Financial
Handbook
1325(b)(1)(B).
taxpay-
he contends
not allow
which
does
11 U.S.C.
claim an
for a
ers to
1325(b),
§of
the term
purposes
For
*4
pay-
make
vehicle for which
do not
income”
current
“disposable
means the
Accordingly, the trustee asserts
ments.1
monthly
by
income
the debtor
received
monthly
income re-
disposable
necessary to be
reasonably
amounts
less
flected on the Kimbros’ means test form
support
for the maintenance or
expended
accurately
disposable
their
does not
reflect
the debtor
dependent
of the debtor or
of
The trustee
that the Kim-
income.
asserts
for charitable
contributions.
and
expense
are not entitled to deduct the
1325(b)(2)(A)(I)
(ii).
bros
Subpar-
§
and
U.S.C.
(3)
court erred
bankruptcy
and
reasonably
provides: “Amounts
agraph
plan.
confirming
expended
paragraph
to be
necessary
(2)
with
shall be determined in accordance
III. DISCUSSION
(A)
(B) of section
subparagraphs
may
of
707(b)(2), if
month-
The issue whether a debtor
the debtor has current
in the
ownership expense
median in-
a vehicle
ly
greater
income”
than the
deduct
1325(b)(3).
bankruptcy
§
means
when the debtor
come.
U.S.C.
test
has arisen
payment
has no debt
lease
form,
The Kimbros’
test
Form
means
frequency
with some
since the enactment
22C,
income
monthly disposable
disclosed
bankruptcy
the 2005 amendments to the
of
Using
form
of
the means test
$183.60.
de
twenty eight published
At least
code.
“disposable
calculate this
of
to
amount
and there
cisions have addressed the issue
income,”
an
the Kimbros deducted
own-
quest
split
authority
a close
of
on the
their first
ership expense
for
$358.82
ion.2
by
figure
This
was calculated
vehicle.
their
subtracting
payment
car
$112.18
language
The issue arises based on the
$471.18,
the Local Standard of
707(b)(2)(A)(ii)(I),
U.S.C.
by
required
U.S.C.
test,
states, “The debtor’s
means
which
707(b)(2)(A)(ii)(I).
The Kimbros also monthly expenses shall be the debtor’s
an
for
deducted
$332
speci-
expense amounts
Kim-
Kimbros’
vehicle. The
second
and Lo-
fied under the National Standards
any debt
reported
payment
no
bros
Standards, and the debtor’s actual
cal
by the
secured
second vehicle.
categories speci-
monthly expenses
issued
Necessary Expenses
fied as Other
argues
trustee
the Kimbros’
The
for the
propose
“projected
by
all
the Internal Revenue Service
plan
pay
did not
to
collected,
Clark,
complete
http://
are
in In re
No.
may
IRM
be found at
2. The cases
1. The
Analysis
07-23390,
(Bankr.E.D.Wis.
www.irs.gov/irm.
Financial
The
vary region. census There are two means test. components, operating expenses one for The substantial discretion allowed ownership expenses. and one for The ta- a revenue officer under the IRM is incon- “Operating and Public ble Costs Trans- test, sistent portation purpose Costs” sets forth various with the of the means *5 depending uniform, amounts on whether debtor which a is to utilize bright-line car, no owns one car or two cars. The judicial test that eliminates discretion. “Ownership provides table for Costs” premise The argu- trustee’s amounts for the “first car” debtor’s and ment —that the IRM does not allow a vehi- “second car.” ownership cle when expense there is no Transportation The IRS Local Stan- mistaken; debtor or payment lease —is suggest do dards not state or that a tax- IRM gives a office revenue substantial dis- payer payment must have a debt or lease cretion any to consider and allow for the revenue officer deduct the appli- above the standards. However, ownership expense. cable 7. Contrary suggestion in some argues that trustee because under cases, every who debtor owns a vehicle IRM, the a IRS does not deduct vehicle expenses arising incurs from the owner- ownership expense when there is no debt ship regardless of the vehicle of whether vehicle, payment or lease U.S.C. the debtor a debt or payment incurs lease 707(b)(2)(A)(ii)(I) § incorporates the same associated with the vehicle. rule into the bankruptcy means test. fully These reasons are discussed more rejected court the trus- below. position and tee’s held that Kimbros are allowed to ownership deduct the ex- language A. The plain 11 U.S.C. pense applicable in amounts Local 707(b)(2)(A)(H)(1) a states that Transportation Standards. The Panel af- debtor’s means test deductions firms for the following reasons: specified “shall be” the amounts in plain 1.The of 11 language U.S.C. the local standards and there is 707(b)(2)(A)(ii)(I) that a states debtor’s nothing explicit statutory in that
means test
“shall
deductions
be” the
language
requires
that
a debtor to
specified
amounts
local
standards
have a
or lease payment
debt
and there is
in that
nothing explicit
statu-
deduct a
ownership expense
vehicle
tory language
requires
a debtor to
in the bankruptcy means test.
have
debt or
payment
lease
to deduct a
starting
ownership
point
discerning
vehicle
“The
expense
bank-
ruptcy means
congressional
test.
is the existing
intent
statute-
text,
cifically
ownership
address vehicle
ex
predecessor
not the
statutes.
ry
all;
specifically
that when the stat-
at
nor does it
state
It is well established
the sole function of
language
plain,
ownership
ute’s
to deduct a vehicle
ex
disposition
least where the
pense,
making
the courts-at
a debtor must be
either
required by the text is not absurd-is
on a
payment
debt secured
terms.” Lamie
according
enforce it
to its
on
To the
payment
lease
the vehicle.
Trustee,
526, 584, 124
v. U.S.
U.S.
explicitly
contrary,
the statute further
(2004) (cita-
1023,
2007). below, F part opinion of this the trustee position In re Demonica also notes that this Local Standards: These establish standards adopted has been in the means test forms and necessary expenses: housing two forms, approved by comments to the transportation. Taxpayers will be allowed *7 the Judicial Conference of the United States: the actually local standard or the amount Again, the committee notes to the paid, official whichever is less. provide guidance. forms some "Each of specified the by amounts the IRS in the Transportation taxpayer B. If a ahas —... Local are Standards treated the IRS as a payment, ownership car the allowable cost cap expenses, on actual but because added the operating to allowable cost 707(b)(2)(A)(ii)(I) § provides for deduction equals transportation the allowable ex- specified in the 'amounts under the ... pense. taxpayer payment has no car If Standards,' Local the forms treat these only operating portion the cost the trans- of (Form amounts as allowed deductions.” portation figure standard is used to the al- Cl) (alteration para. B22 committee note in transportation expense. lowable Under original). costs, ownership separate caps provid- are Id. at 902. It must also be noted that Form ed for the first car and second car ... requires 22C itself the debtor to subtract the added) (emphasis amount expense of actual from the addition, the note to section 5.15.1.9 the deduction, but not to enter an amount less IRM, Analysis Financial Handbook states: text, than zero. As Congress noted in the taxpayer payment, If the has no car or no intended cap the standards to abe based on car, question taxpayer how the travels to payment, the actual debt or lease this calcula- work, care, grocer, and from medical etc. necessary. tion would not be taxpayer only The operating is allowed the IRM, 5. Section 5.15.1.7 of the transportation, (emphasis Financial Anal- cost or the cost of Handbook, ysis provides added.) pertinent part: in
525
position
the
would at least have to instruct the read-
greatly oversimplified
has
fact,
identify
IRM
point;
the
er
to
two numbers-—-the
the IRM this
how
officer substantial dis-
permits
revenue
number and the limit. This
starting
taxpayer’s
in allowing
expenses.6
number,
cretion
only references
that
statute
one
the Local
The
derived from
Standards.
difficulty with the trustee’s
The second
phrase
“the debtor’s
above,
is
argument
that as demonstrated
...
specified
amounts
under the
707(b)(2)(A)(ii)(I)
incorporate
§
does not
only
Local
one
Standards” references
Analysis
IRM or the Financial
Hand-
the
number, not two. This
alone
structure
book,
That
or even refer to them.
itself
it functions to
the num-
specify
indicates
the
ample grounds
reject
to
trustee’s
used, rather
to
ber
than a limit
But
is more.
argument.
there
some
unidentified
other
number.
explicitly incorporated
have
the IRM
could
Analysis
the Financial
into
or
Handbook
absurdity
being
ambiguity
no
There
707(b)(2)(A)(ii)(I). Or, Congress could
§
num-
reading the statute
define the
707(b)(2)(A)(ii)(I)
limit
have drafted
“specified”
ber
used—the number
to be
expenses.
to actual
It
deductible
Local Standards —there does not
Instead,
to do
noted
chose
neither.
any
seem
reason
pursue
to be
above, Congress chose to do the exact
analysis further.
by excluding any
payments
debt
opposite
414,
Fowler,
B.R.
Id. See also
349
ownership
allowable
ex-
from
debtor’s
(Bankr.D.Del.2006).
deduction.
pense
legislative history
C. The
demon-
Congress “says in a statute
it
what
intended to
strates
says
means and means in a statute what it
incorporate
specific
IRS
Nat. Bank v.
there[.]” Connecticut
Ger
expense standards
main,
254,
1146,
249,
503 U.S.
S.Ct.
IRM.
(1992).
1149,
526
(A) expense allowances under the actual that Congress did not Standards, applicable National Local intend to limit bankruptcy means test Standards, Necessary Ex- and Other expense deductions to the debtor’s actual (excluding payments allowance expenses. debts) ... in for the debtor the area Alexander, In In re B.R. 344 742 in which the debtor resides as deter- (Bankr.E.D.N.C.2006), the court noted mined under the Internal Revenue Ser- in early process amending analysis in vice financial code, chapter 13 trustees rec- effect as of the date the order for ognized using the new means test of relief. calculating disposable income would result 18, 1998), Rep. (May H.R. 105-540 H.R. high-income paying some debtors less (1998). 3150, 105th Congress previous than under the provisions. code In the amendments that were enacted chapter repeatedly 13 trustees made 2005, the reference to the Internal Reve Congress, their concerns known to but to nue analysis Service financial was re no avail. Id. at 747 (citing Marianne B. Instead, noted, moved. the section White, Miehaela Catching Culhane & M. states that a debtor is allowed to deduct Can-Pay Debtors: Is the Means Test the the “applicable expense amounts Only Way?, 13 Am. Bankr.Inst. L.Rev. specified under the National and Local (2005)). 665, alert, 681 “‘[T]his followed Standards.” 11 U.S.C. by Legislature’s nonresponse, should 707(b)(2)(A)(ii)(I). change “The from support presumption legislature ” prior version in Congress’ evidences awareness and intention.’ 13 Am. Bankr. tent that the Courts be bound Lamie, Inst. L.Rev. at 681 (quoting 540 analysis financial contained the IRM 541, 1023, at U.S. S.Ct. 157 L.Ed.2d and lends credence to the Court’s conclu 1024). sion that it only should look A few courts argued have that to accom- amounts set forth in the Local Standards.” plish generally one of the presumed pur- (Bankr. Fowler, 349 B.R. poses of the 2005 pay amendments —to D.Del.2006). more to creditors in chapter 13—an actual addition, the House Committee Re- required order to port states, to the bill that was enacted deduct the amount in the stan- “The bill also makes substantial changes to dard for the ownership expense in the chapter substituting the ex- IRS See, Wilson, bankruptcy means test. e.g. pense standards to disposable calculate in- B.R. argument 729. That observes ____The come remains formula inflexible that a below-median in chapter debtor and divorced the debtor’s actual cir- can deduct actual expenses, so it Report cumstances.” of the Committee on makes no sense to allow an above-median Judiciary, Representatives, House of debtor to deduct an Accompany S. H.R.Rep. No. 109- higher actually than the debtor incurs. (2005), pt. 1 at Cong. U.S.Code & *9 added). 2005, Admin.News p. (emphasis However, gen this reliance on the Barr, See also In re 341 B.R. legislative history eral or intent of BAPC- (Bankr.M.D.N.C.2006). PA point legislative misses the that legislative history This history specific establishes both to this amended code sec that Congress was aware that Congress the IRS tion shows that was aware of the standards were not the same a deliberately as debtor’s IRM but incorpo- chose not to http://www.irs.gov/individuals/articleA),, This reliance also the statute.
rate it into id=96543,00.html.7 purpose of the another overlooks means bright-line amendments —to create Trustee Pro- The website for U.S. Ac- judicial discretion. to eliminate test viewers, which the IRS refers gram, in these cases cordingly, argument ownership expense advises that rejected. must be Local Standard is amount from the IRS completing for ease of use
designed the IRS nothing explicit in form, D. There is that the again suggesting means test Transportation Standard Local amount from the Local Stan- applicable have a a debtor to requires that in the means test form: dard is to be used to deduct debt or lease Ownership component of the Costs expense in the ownership published is Transportation Standards test. bankruptcy means basis, by number of cars. on a national information, in a format reproduced This noted, ownership expense the vehicle As completing designed for ease of use bankruptcy means test in the applicable is forms, available at bankruptcy is these incorporation of the through statutory link.8 following Those standards IRS Local Standards. .gov/ust/eo/bapcpa/ http://www.usdoj provide for a vehicle 20070201/meanstesting.htm. and the debtor’s locale deduction based on As in the stat- number of vehicles owned. allowed E. The substantial discretion standards into incorporates these ute the IRM a revenue officer test, nothing in the IRS means there is purpose with the is inconsistent that this ex- Local Standards that states uniform, adopt means test to the debt- can be deducted when pense judi- bright-line test that eliminates payment or a lease or has either a debt discretion. cial The trustee does payment on the vehicle. uniform intended that there be Congress otherwise. not contend for determin- readily-applied formula regard, significant it is also In this pre- court should ing when it recently announced the IRS has petition is chapter that a debtor’s sume collection of finan- not believe that its does an above- determining and for an abuse IRM applicable cial standards chap- disposable income median debtor’s bankruptcy: referring to the Na- By explicitly ter 13. Standards, in- Financial and Local Disclaimer: IRS Collection tional intended for use in cal- a table of standard Standards are corporated delinquent easily uniformly applied; culating repayment of tax- that could be par- that the court and are effective intended es. These Standards purposes federal utilize the amount simply ties March only. Expense in- column based on the from the tax administration size, income, bankruptcy calcu- family number use in debtor’s formation for are entered The amounts can found on the website cars and locale. lations Program. a determina- test form and into the means the U.S. Trustee states, “following the viewer to link” refers to 8. The "The revised standards 7. The website regions by the Local which analysis a choice of census conducted are effective for financial organized. Transportation Standards are March 2008.” Id. on or after *10 disposable accomplished Housing tion of income is A. estab- —Standards judicial county lished for each within a poli- without discretion. The clear state. deciding appro- When a deviation cies behind the means test were the uni- if priate, application moving a consider the cost to a bright-line form of test that of residence; new the increased cost judicial Plainly, eliminates discretion. transportation to work and school that policies determined these moving will result to lower-cost important accuracy. were more than from housing consequences. and the tax However, if the IRM were used to de- consequence tax is the difference be- expenses, termine the amounts of as the taxpayer currently tween the benefit the argues, trustee the means test would of property derives from the interest and necessity again highly discretionary be a tax deductions on A Schedule test, IRM, because under the a revenue taxpayer benefit the would derive with- significant officer is afforded discretion (em- adjusted expense, out same or determining taxpayer’s ability a pay a added) phasis Many paragraphs tax debt. illustrate this addressing “necessary a third type discretion, extent of this as the extended expenses,” which includes “other ex- list below demonstrates. penses,” paragraph 5 of section 5.15.1.7 The IRM first sets “Expectations,” and explicitly gives the collection agent discre- 5.15.1.1, in paragraph 6 of section states: states, tion in analyzing expense. It The standard amounts set forth in the expenses may “Other may be allowed be national guidelines and local are de- necessary allowed meet the expense signed to living account for basic ex- test. The amount allowed must be reason- cases, penses. In some based on a considering taxpayer’s able individual taxpayers individual and [sic] fact’s facts and circumstances.” circumstances, appropriate it A revenue allowing officer’s discretion in to deviate the standard amount expenses above the national and local stan- when to do so will cause the failure complete dards is made in paragraph 7 of taxpayer hardship, (emphasis economic section 5.15.1.7: added) National local standards are Then, in an “Overview” of allowable ex- guidelines. it is determined stan- If penses, paragraph 1 of pro- section 5.15.1.7 dard amount is inadequate provide vides: specific taxpayer’s living basic ex- expenses Allowable include those ex- penses, Require allow a deviation. penses that meet necessary expense taxpayer provide reasonable substan- file, necessary expense test. The test (em- is de- tiation and document the case as expenses necessary added) that are phasis fined provide taxpayer’s and his or her A revenue officer even has discretion family’s health pro- and/or welfare counting persons the number of allowed duction income. The must applying standards. Para- necessary be reasonable. The total ex- graph 8 of 5.15.1.7 Section states: penses establish the minimum a taxpay- Generally, the total persons number of er family needs to live. allowed for national standard In describing application of the local should be the same as those allowed as housing, standards for paragraph dependents of sec- taxpayer’s on the current tion 5.15.1.7states: year income tax return. Verify exemp- *11 license, transportation. Trans- public tax taxpayer’s on income
tions claimed require- required produce costs not dependency portation meet return may There be rea- the health and wel- ments of the IRC. income or ensure Fully document exceptions. family sonable are not considered fare For exam- any exceptions. necessary. availability reasons Consider children for whom foster children or ple, payments car public transportation if added.) (emphasis lease) adoption pending, (purchase prevent or will tax liability being paid part or of discretion is An additional instance transportation Public costs could full. of the national application found significantly it does not option be an food, standards, if apparel, which cover commuting increase time and incon- prod- care housekeeping supplies, personal add- taxpayer, (emphasis venience the services, As and and miscellaneous. ucts ed) these, of section 5.15.1.8 paragraph states, than “A that claims more taxpayer Finally, addressing expenses,” “other allowed the national standards the total fees, fees, accounting legal chari- including justify sepa- each must substantiate and contributions, care, child court-or- table national standard rate of the total expenses, care payments, dependent dered amounts.” care, education, involuntary health deduc-
Addressing the local standard for hous- insurance, debts, tions, unse- life secured utilities, I.A. of section ing paragraph and loans, debts, in- telephone, cured student provides: 5.15.1.9 service, pay and loans to federal ternet gas, electricity, wa- The utilities include taxes, 1 of section 5.15.1.10 paragraph ter, fuel, oil, gas, gar- trash and bottled states: fuels, collection,
bage wood and other may be considered Other Housing septic cleaning, telephone. and necessary expense test— they meet the rent, mortgage or expenses include: for the health and they provide must interest, taxes, parking, neces- property taxpayer his or her welfare of the and/or repair, and home- sary maintenance family produc- must be for the or insurance, home- owner’s or renter’s tion This is determined of income. condominium fees. owner dues and and circumstances based facts necessary Usually, this is considered case, added) (emphasis each Any place for the of residence. addressing expenses, other In further be al- housing expenses other should provides: 5.15.1.10 paragraph 3 of section only if, taxpayer’s based on a lowed circumstances, and dis- individual facts necessary or The amount allowed for taxpayer eco- alloioance will cause the on the expenses depends conditional added) (emphasis hardship, nomic the liabili- taxpayer’s ability pay to full the local stan- Similarly, addressing taxpay- years and on the ty within five expenses, para- transportation dard for and circumstances. er’s individual facts l.B. of section 5.15.1.9 states graph within 5 liability paid If the can be specified expenses, covers this standard may appropriate to allow years, it be be considered: that alternatives should necessary but taxpayer the excessive insurance, expenses. taxpayer If the conditional Vehicle (lease maintenance, fuel, years, it pay cannot within purchase), taxpayer to allow the required appropriate registration, and local state necessary conditional ex- fees, tolls, driver’s excessive inspection, parking *12 case, year discretionary to a penses up penses for to one order case (em- basis. modify expense, or eliminate the added) phasis premise F. The argu- the trustee’s of excerpts These from the IRM Financial ment —that the IRM does not allow Analysis overwhelmingly Handbook estab a vehicle when process applying guide lish that the of pay- there is no debtor or lease pur lines of the IRM for tax collection mistaken; gives ment —is the IRM highly discretionary a poses process for a revenue substantial discre- office reality, process a revenue officer. In that any tion to consider and allow ex- highly discretionary pro is much like the penses above the standards. bankruptcy judges cess that had utilized The IRM makes it clear that for tax before the 2005 amendments to the bank purposes, collection the standards are ruptcy determining code when the debtor’s guidelines. Paragraph 7 of section disposable net income under 11 U.S.C. 5.15.1.7, IRM, states, “National local ex- 1325(b). (In Mancl v. Chatterton re pense guidelines. standards are If it is (W.D.Wis.
Mancl), B.R. 541-42 a determined standard amount is inade- 2008); Spraggins, B.R. 223- quate provide specific taxpayer’s for a (Bankr.E.D.Wis.2008) (recognizing living expenses, basic allow a deviation.” “Congressional bright- intent to a employ It is also worth repeating quote disposable line test for income remov Overview, paragraph section ing bankruptcy judgments’ court ‘value 5.15.1.7: concerning lifestyle”). the debtor’s See expenses Allowable include those ex- Behlke, (6th
also In re
whether
debtor
plicable”
first sentence of U.S.C.
on that vehicle. The
707(b)(2)(A)(ii)(I).
The first sentence of
court’s decision is AFFIRMED.
states that
U.S.C.
monthly expenses shall
“[t]he debtor’s
FULTON, Bankruptcy
THOMAS H.
applicable monthly expense
the debtor’s
Appellate
Judge, dissenting.
Panel
specified
amounts
the National
(the
The other members of this Panel
*14
Standards,
Standards and Local
and the
“Panel”)
superb
have made a
effort
monthly expenses
actual
debtor’s
seemingly
weave a
robust cloth from some
Necessary
categories specified as Other
however,
must,
I
what thin threads.
re Expenses
issued
the Internal Revenue
so,
join
In
I
spectfully
doing
dissent.
with
for the area in which
Service
the debtor
majority
bankruptcy
of the
courts and
”
added.)
....
(emphasis
resides
The Pan-
overwhelming majority
appellate
of
“applicable” simply
el believes that
directs
courts across the United States
have
pick
the debtor to
out and use the dollar
issue,
including
considered this
8th and
published by
amounts set forth in tables
See,
Wilson,
e.g.,
9th
Circuit BAPs.
(“IRS”)
the Internal Revenue Service
(8th
2008)
729,
383 B.R.
732-33
Cir. BAP
part of its National Standards and Local
(“[Wjhile bankruptcy courts have been di
Standards without reference to the IRS’s
issue,
appellate
vided on this
courts
guidelines
using
In
those tables.
considering
question
all
have
conclud
words,
“just
Panel’s
the debtor will
look
that a
ed
vehicle
is
up.”
them
incurring
if a debtor is in fact
believe, however,
“applicable”
I
that if
is
expense.”).
jurists
such an
Numerous
any meaning
to have
at all in the context
issue,
have considered this
and their ratio
707(b)(2)(A)(ii)(I)10,
§
of 11
U.S.C.
against permitting
both for and
nales
debt
guidelines
debtor must look to the IRS’s
ors
more than actual
to deduct
regarding
the use of the tables set forth
ownership expenses vary to some extent.
(In
See,
the National Standards and Local Stan-
e.g.,
Sawdy
Grossman v.
re Saw
(E.D.Wis.2008).
199,
dy), 384 B.R.
I
dards to determine the amount of ex-
paths
“applied”
will not
retrace
the well-worn
be
to reduce the
Rather,
monthly
around both sides of the issue.
I
debtor’s
income.11 If
330, 339,
money
space
square
Corp.,
of
and a
sum
few
Sonotone
442 U.S.
S.Ct.
(1979).
105(a)
backyard,
§
in the
60 L.Ed.2d
feel
11 U.S.C.
still
prevent
allows the
court to
such
guidelines
11. Some of
these
included in
process,
proven.
an abuse of its
when
Marra
Standards,
the IRS Collection Financial
avail-
Mass.,
-,
v.ma
Bank
- U.S.
Citizens
http://www.
irs.gov/individuals/arti-
able at
(2007) (rely
127 S.Ct.
intends that dollar amounts set "transporta- suggest apply only in the Local Standards that we tables Panel does not "caps” person expenses tion” be used explanations and the instructions and some of —the question may expenses up to claim actual ignore others. those amounts. at http: //www.irs.gov/ 13. Available Notably, guidelines appearing on the same businesses/small/article/0„id= 104623,00. taxpay- page table also state that "[t]he as the html. actually spent, amount or er is allowed the and, therefore, depending negative insufficient to According guidelines, to IRS considered, type expense being Chapter plan, on the fund confirmable may claim the full amount set persons subtracting whereas the debtor’s actual ex- pertinent e.g., National penses forth would not have such an effect. table — “food, clothing and other Standards with a Contrast this result second debtor “out-of-pocket health care expenses” and exactly expenses who the same actual has up cap actual expenses”-or expenses debtor, as the first and whose current pertinent table-e.g. set amount forth multiplied by income twelve is “housing Local Standards for and utilities” just one dollar less than that of the first Thus, it “transportation.” would have debtor. The second debtor would be al- made no sense for to have used expenses lowed to use actual his/her phrase expenses” “actual in the con- and, disposable derive income ac- his/her text of the National Standards and Local cordingly, would be able to fund a confirm- ultimately expenses Standards because the Chapter plan. absurdity able be- might might person’s not be the allowed readily apparent-a higher comes income expenses, depending actual on the nature propose debtor would be unable to a con- and, housing, in the case of Chapter plan firmable a slight- whereas transportation expenses, utilities ly exactly lower income debtor with caps. whether the same exceeded the propose same would be able to Conversely, it makes eminent sense for Chapter plan. confirmable expenses” to have “actual used Even if the above-median debtor could Necessary in the context of Other Ex- propose Chapter plan, a confirmable he because the allowable paying or she would be less his/her person’s there are limited to the actual *16 creditors than the under-median income that he or can she demonstrate Thus, debtor. would the result be person’s particu- are reasonable under that absurd, it run directly contrary would to lar facts and circumstances. Congressional intent. As noted the 8th Finally, interpretation the Panel’s Wilson, Circuit BAP in In re “[ajlthough first sentence U.S.C. legislative history to BAPCPA is scant will lead to that results piece together, and often difficult to there are both and at odds with Congres- absurd can no that purpose doubt of these simple sional intent. A illustration demon- 707(b) 1325(b) §§ amendments to was Suppose, example, strates this. require above-median income debtors to there is a debtor with nominal actual make more funds available to their unse- monthly expenses monthly whose “current creditors, cured by limiting do so just multiplied income” twelve is one authority the court’s expenses.” allow dollar above the median income. Wilson, B.R. at interpretation Given the Panel’s of 11 before, many As has been said times 707(b)(2)(A)(ii)(I), U.S.C. debtor nearly cliche, point becoming required would be claim full reasonable minds can and will differ. For amounts set forth in the tables in the reasons, I foregoing respectfully dis- National and Local Standards Standards sent from the Panel’s decision. though even debtor’s actual significantly lower. When subtracted from the in- debtor’s “current
come,” such table-derived amounts could “disposable cause the debtor’s income” to