Jeffrey Klobucar, Bassford Remele, P.A.
Contributing Editor: Matthew D. Swanson, Fuller, Seaver, & Swanson, P.A.
Eighth_Circuit___Hanson_v__Seaver.pdf
In Hanson v. Seaver (In re Hanson), 903 F.3d 793 (8th Cir. 2018) (Smith, J.), the Eighth Circuit held that a Minnesota property tax refund does not fit within the Minnesota Legislature’s definition of “government assistance based on need” and is therefore not exempt under Minn. Stat. § 550.37 Subd. 14.
The Chapter 7 Trustee objected to the debtor’s claimed exemption of a Minnesota property tax refund as “government assistance based on need” under Minn. Stat. § 550.37, Subd. 14. The trustee based his objection on the Eighth Circuit BAP’s decision in Manty v. Johnson, 509 B.R. 213 (BAP 8th Cir. 2014). The debtor argued that Manty v. Johnson had a progeny issue as the case it derived its legal analysis from was overturned by the Eight Circuit in In re Hardy, 787 F.3d 1189 (8th Cir. 2015).
In Hardy, the Eigth Circuit decided that the refundable portion of the Additional Child Tax Credit (ACTC) was exempt as a “public assistance benefit” under Missouri law. As it did in the Hardy decision, the Eighth Circuit analyzed: 1) the Minnesota Legislature’s intent in passing the property tax refund act; 2) the history of the statutes and amendments thereto; and 3) the operation of the statute in practice.
The Eighth Circuit contrasted the Minnesota statute with the ACTC, finding that its express intent does not include providing relief to needy individuals, and, in practice, households with a significant income are eligible for a partial refund. On the other hand, the ACTC has a $26,300 phase-out for an individual with one child. The panel also noted that since enactment of the Minnesota Property Tax Refund Act the Minnesota Legislature has expanded eligibility for a property tax refund to higher-income earners. Finally, the Eighth Circuit also noted that other provisions of the Minnesota Property Tax Refund Act allow for a refund irrespective of income, but rather based solely on the increase in an applicant’s property taxes over the prior year.
The Eighth Circuit concluded its analysis of the Minnesota Property Tax Refund Act by holding that, in summary, “an overwhelming emphasis on benefitting the poor does not exist.” The BAP’s decision was affirmed.