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Property Tax Exemption Issue Going to the 8th Circuit Court of Appeals

On Behalf of | Jan 12, 2017 | Bankruptcy, Firm News


As expected, the Bankruptcy Appellate Panel (BAP) has followed its own precedent in determining property tax exemptions are not exempt as “government assistance based on need,” and I am appealing the issue to the 8th Circuit Court of Appeals. The BAP’s Opinion can be downloaded here.

The BAP, in my opinion, improperly determined that because a different subdivision of the property tax relief can benefit homeowners whose property taxes increased by at least 12%, without regard to income, it is not solely for the benefit of the needy. They declined the debtor’s request to confine their decision to the subdivision of the statute under which she was eligible for relief, which was based solely on her income.

This issue arises in bankruptcy cases for people electing to protect their assets under state law, which is typically debtors with more than $20,000 equity in their house (or $40,000 if married). Debtors with less equity can almost always protect the property tax refund under the federal wildcard exemption.

I prevailed the only other time I have been to the 8th Circuit Court of Appeals, so hopefully I will stay undefeated. I’ve got $10,000 worth of pro bono time into this issue over a $1500 tax refund, and am doing it more for the benefit of future debtors. The issue should also be considered by the legislature, but I will direct my efforts toward the appeal before worrying about lobbying.

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