FILED U.S. COURT OF AP P EALS E LEV EN T HC IRC U IT APRIL21, 2005 THOMAS K. KAH

N CLERK [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 04- 10511

________________________ D . C. D o c k e tN o s . 0 3 - 0 0 6 5 5 - CV - F- N & 0 3 - 3 0 6 6 2 - W RS I N R E : T O M E K A S C O T T J A M E S , D e b to r .

__________________________________________________________________ D A N I E L G . H A M M , P la in tif f - A p p e lla n t, v ersu s T O M E K A S C O T T J A M E S , D e f e n d a n t- A p p e lle e .

________________________ N o. 04- 10512

________________________ D . C. D o c k e tN o s . 0 3 - 0 0 6 5 4 - CV - F- N & 0 3 - 3 0 6 5 9 - W RS I N R E : L I N D A D . S A N K E Y ,2 D e b to r .

__________________________________________________________________ D A N I E L G . H A M M , P la in tif f - A p p e lla n t, v ersu s L I N D A D . S A N K E Y , D e f e n d a n t- A p p e lle e .

________________________ N o. 04- 10526

________________________ D . C. D o c k e tN o s . 0 3 - 0 0 6 5 3 - CV - F & 0 2 - 3 3 5 8 2 - W RS I N R E : H O P E B . H O N E Y C U T T , a .k .a . H o p e B . M iz z e ll, D e b to r . __________________________________________________________________ D A N I E L G . H A M M , P la in tif f - A p p e lla n t, v ersu s H O P E B . H O N E Y C U T T , a .k .a . H o p e B . M iz z e ll, D e f e n d a n t- A p p e lle e .3 ___________________________________ A pp ea l s f

rom the U ni t ed S t at es D i stri ctC ou rt f o rth e M i d d l e D i s tr i c to f A l ab a ma

_________________________ ( A pr i l 21, 2005) B efo re E D M O N D S O N , C h i ef Ju d g e, an d D U B IN A an d H U L L , C i rcu i tJu d g es. H U L L , C i rc ui tJudg e: A pp el l antD ani el G . H am m (the “ T rust ee ”) , the T rust ee i n the C hapt er7 ba nkrupt c y c a s e s of

D e bt or s - A ppe l l e e s T om e ka S c ottJ a m e s , L i nda S a nke y , a nd H ope H one y c utt( c ol l e c t i ve l y , the “ D e bt or s ” ) , obj e c t e d t o the D e bt or s ’ c l a i m s f or fe dera l ea rned i ncom e t ax cr edi t(“ E IT C ”) exem pt i on s i n thei r i nd i vi du al ba nkrupt c y c a s e s . T he ba nkrupt c y c our tove rrul e d the T rus t e e ’ s obj e c t i ons , a nd th e d is tr ic t c o u r t a f

f irm e d th e b a n k ru p tc y c o u r t’s ru lin g s . T h e T ru s te e n o w ap p e a ls th e d is tr ic t c o u r t’s o r d e r . A f te rr e v ie w a n d o r a l a r g u m e n t, w e a f f irm . I . B AC KG RO UN D I n th is c o n s o lid a te d ap p e a l, e a c h o f th e D e b to r s is th e s u b

je c t o f a s e p a r a te C hapt e r7 ba nkrupt c y c a s e . W he n the y f i l e d the i rba nkrupt c y pe t i t i ons a nd s c h e d u le s , a ll o f

th e D e b to r s e x p e c te d to r e c e iv e f e d e r a l E I T C p a y m e n ts w ith th e ir t ax re fund s f

or the ye ar20 02 . In ea ch bank rupt cyca se , the D ebt or fi l ed a pers on al p r o p e r ty s c h e d u le c la im in g a n in te r e s t in s u c h E I T C p a y m e n ts a s e x e m p t p r o p e r tyIn the ca se of debtor Honeycutt, a portion of the E I TC accrued after thecommencement 1 of Honeycutt’s orig inal Chapter 13 c ase, which subsequently was c onverte d to a Chapter 7 c ase. The Tr ustee acknowledg es that the portion ac crue d after the orig inal petition date is not part of the bankr uptcy estate a nd objects only

to the exemption of the portion accr ued prior to the petition date. Although e ach of

the Debtor s is the subject of a separate, individual bankruptcy case , the 2 c a se s all w erebe fo rethesameba nk ru ptcy and dis tric t c ourt

judg e s. 4 pu rs uantt o A l abam a C od e § 38 -4-8 (197 5). In ea ch bank rupt cyca se , the T rust ee obj e c t e d t o the e xe m pt i on of the E I T C pa y m e nt s f

r om the ba nkrupt c y e s t a t e , a nd 1 in e a c h c a s e th e b a n k ru p tc y c o u r t o v e rru le d th e T ru s te e ’s o b je c tio n . T he T rus t e e the n appe a l e d the ba nkrupt c y c our t ’ s rul i ng i n e a c h c a s e t o the di stri ctcourt . O n app ea l , the di stri ctcourtaf fi rm ed the rul i ng s of the bank rupt cy c o u r t. 2 T he T rust ee no w appeal s the di stri ctcourt ’ s order s a ff i rm i ng the bank rupt cy c o u r t’s o v e rru lin g o f

th e T ru s te e ’s o b

je c tio n s in th e c a s e s . I I . DI S CU S S I ON A . A l ab am a L aw W e e xpl a i n f

i r s tw hy A l aba m a l a w gove rns c e r t a i n ba nkrupt c y e xe m pt i ons avai l abl e t o the D ebt ors i n thi s c as e. F eder al bank rupt cyl aw prov i des thatthe com m ence m entof a bankrup t cy c a s e c r e a t e s a n e s t a t e , w hi c h i s l i qui da t e d by the T rus t e e f orthe be ne f

i tof the debt or’ s c re di t ors. 11 U . S . C . § 5 41 (a ). W i th cert ai n except i on s, the bank rupt cy11 U.S.C. § 541(b) and (c ) provide c ertain exceptions not relevant here. 3 5 e s t a t e i nc l ude s “ a l l l e ga l ore qui t abl e i nt e r e s t s of the de bt ori n pr ope r ty a s of the com m ence m entof the ca se . ” 11 U . S . C . § 5 41 (a )( 1). H ow ever , § 5 22 prov i des 3 th a t c e r ta in p r o p e r ty m a y b e e x e m p te d f r o m th e b a n k ru p tc y e s ta te . 1 1 U .S .C . § 5 2 2 ( b ) . M or e s pe c i f

i c a l l y , § 522( b) pr ovi de s tha tc e r t a i n e xe m pt i ons s e tf or th i n § 522( d) a r e a va i l abl e t o a n i ndi vi dua l de bt orunl e s s the s t a t e l a w appl i c abl e t o the d e b to rd o e s n o t a u th o r iz e s u c h e x e m p tio n s . 1 1 U .S .C . § 5 2 2 ( b ) ( 1 ) . I n e s s e n c e , § 52 2(b) prov i des e ac h st at e w i th the po w ert o “ op tou t ” of the exem pt i on s provi ded u n d e rb a n k ru p t c y l a w i n § 5 2 2 ( d ) a n d i n s t e a d t o c r e a t e th a ts t a t e ’ s o wn e x e m p tio n s . T he st at e of A l abam a, w ho se l aw appl i es t o eac h D ebt or i n thi s app ea l , has exer ci se d thatop t -outprov i si on and crea t ed i t s ow n exem pt i on s f or i nd i vi du al debt ors. S ee A l a. C od e § 6-10 -11 (19 75 ) ( st at i ng thati n b ankrup t cyca se s, “ there shal l be exem ptfr om the prop erty of the es t at e of an i nd i vi du al debt or on l y that pr ope r ty a nd i nc om e w hi c h i s e xe m ptunde rthe l a w s of the S t a t e of

A l aba m a a nd unde rf e de r a l l a w othe rtha n [ § 522( d) ] ” ) . T hus , the e xe m pt i ons a va i l abl e t o the D e b to r s h e r e a r e d e f

in e d b y A lab a m a s ta te la w r a th e rth a n f e d e r a l b a n k ru p tc y la w . B . E xe m p t i on i n A l ab am a C od e § 38- 4- 86

T h e o n ly e x e m p tio n r e le v a n t to th is ap p e a l is A lab a m a ’s e x e m p tio n in A lab a m a C o d e § 3 8 - 4 - 8 f o r“a ll a m o u n ts p a id o rp a y ab le a s p u b lic a s s is ta n c e to ne e dy pe r s ons . ” O n appe a l , the T rus t e e a r gue s : ( 1) tha ta n E I T C pa y m e ntdoe s not qu al i fyas “ pu bl i c a ss i st ance ” und er§ 3 4-4-8, and thu s i s notexem ptpers on al p r o p e r ty ; a n d ( 2 ) th a t , i n a n y e v e n t , a d e b t o rwh o e l e c t s t o r e c e i v e a n EI TC paym entas a l um p sum ca nn otcl ai m the paym entas an exem pt“ pu bl i c a ss i st ance ” pa y m e ntunde r§ 34- 4- 8. W e a ddr e s s e a c h a r gum e nti n turn. S ect i o n 3 8 -4 -8 o f th e A l ab am a C o d e p ro v i d es as fo l l o w s: A l l a m ount s pa i d orpa y abl e a s publ i c a s s i s t a nc e t o ne e dy pe r s ons s h al l be e xe m ptf

r om a ny t a x l e vi e d by the s t a t e ora ny s ubdi vi s i on th e r e o f a n d s h a l l b e e x e mp t f r o m l e v y , g a rn i s h me n t , a tt a c hm e ntor an y o th er p ro cess w h at so ev er an d sh al l b e i n al i en ab l e, an di n th e case of a ny ba nkrupt c y , s ha l l notp as s t o the trus t e e orothe rpe r s on a c t i ng on behal f of the cr edi t ors of the re ci pi entof pu bl i c a ss i st ance . A l a. C od e § 38 -4-8 (197 5) (e m ph as i s a dd ed). T h e p a r a m o u n t is s u e in th is ap p e a l is w h e th e rE I T C p a y m e n ts c o n s titu te

“ pu bl i c a ss i st ance ” f

or pu rposes of thi s A l abam a- l aw exem pt i on . B ec ause the t erm

“ publ i c a s s i s t a nc e ” i s notde f i ne d by the r e l e va nts t a tut e s , w e “ s t a r tw i th the a s s um pt i on tha tthe l e gi s l a t i ve purpos e i s e xpr e s s e d bythe or di na ry m e a ni ng of the w or ds us e d. ” U ni t e d S t a t e s v. R odge r s , 466 U . S . 475, 479, 104 S . C t . 1942, 1946 (198 4) (i nt ernal qu ot at i on m arks and ci t at i on om i tt ed). Indeed, “ [i ] ti s s ett l ed l aw i n A l aba m a tha t. . . ‘ [ w ] or ds us e d i n a s t a tut e m us tbe gi ve n the i rna tur a l , pl a i n,7

or di na ry , a nd c om m onl y unde r s t ood m e a ni ng, a nd w he r e pl a i n l a ngua ge i s us e d a c o u r t is b o u n d to in te rp r e t th a t la n g u a g e to m e a n e x a c tly w h a t it s a y s .’” E x p a r te E m pl oy e e s ’ R e t i r e m e ntS y s t e m of A l aba m a , 644 S o. 2d 943, 946 ( A l a . 1994) ( c ita tio n o m itte d ) . I n de t e rm i ni ng the or di na ry m e a ni ng of s t a tut ory t e rm s , w e of

t e n f i nd gui da nc e i n di c t i ona ry de f i ni t i ons . U ni t e d S t a t e s v. M c N ab, 331 F . 3d 1228, 1237 (11th C i r. 20 03 ), ce rt . deni ed, 54 0 U . S . 11 77 , 12 4 S . C t . 14 06 (200 4). T he t erm

“ pu bl i c a ss i st ance ” i s def i ned as “ go vernm entai d t o n ee dy, bl i nd , aged, or di sabl ed pers on s a nd t o d ependentchi l dren. ” M erri am -W ebst erO nl i ne D i ct i on ary, at h ttp ://w w w .m - w .c o m /c g i- b in /d ic tio n a ry ? b o o k = D ic tio n a ry & v a = p u b lic + a s s is ta n c e . T hus , the que s t i on i s w he the rE I T C pa y m e nt s a r e “ gove rnm e nta i d t o ne e dy , bl i nd, aged, or di sabl ed pers on s a nd t o d ependentchi l dren. ” T he E I T C w a s e na c t e d “ t o r e duc e the di s i nc e nt i ve t o w ork c a us e d by the i mp o s i t i o n o f

So c i a l Se c u r i ty t a x e s o n e a rn e d i n c o me . . . , t o s t i mu l a t e th e e c o n o my b y f u n n e lin g f

u n d s to p e r s o n s lik e ly to s p e n d th e m o n e y im m e d ia te ly , a n d to prov i de re l i ef

for l ow -i ncom e f

am i l i es hu rtby ri si ng food and energy pri ce s. ” So r e n s o n v . Se c ’ y o f

th e Tr e a s u ry o f

th e U n i t e d St a t e s , 4 7 5 U . S. 8 5 1 , 8 6 4 , 1 0 6 S. C t . 1600, 1609 ( 1986) ( e m pha s i s a dde d) ( c i t i ng, e . g. , S . R e p. N o. 94- 36, pp. 11, 33 (197 5); H . R . R ep. N o. 94 -19, pp . 3-4, 29 -31 (19 75 )) . B ec ause the E IT C w as8

enac t ed “ t o p rovi de re l i ef for l ow -i ncom e f

am i l i es , ” w e c on cl ud e thati tqu al i fi es as g o v e rn m e n t a id to n e e d y p e r s o n s . I n d e e d , th e T ru s te e d o e s n o t ap p e a rto d is p u te thi s c onc l us i on. T hus , the pl a i n m e a ni ng of the l a ngua ge of

§ 38- 4- 8, s t a ndi ng a lo n e , in d ic a te s th a t E I T C p a y m e n ts , w h ic h c o n s titu te p u b lic a s s is ta n c e p a y m e n ts t o n eed y p erso n s, sh al l n o tp ass t o th e tru st ee i n th e case o f a b an k ru p t cy. T he T rust ee , ho w ever , ar gu es thatthe exem pt i on cr ea t ed by § 3 8-4-8 app l i es on l y t o st at e pub l i c- as si st ance paym ent s a nd no tt o federa l pu bl i c a ss i st ance such a s EI TC p a y me n t s . Th e Tru s t e e ’ s a r g u me n tr e l i e s u p o n a n o th e rs t a tu t e i n th e s a me c h ap te ro f

th e A lab a m a C o d e , w h ic h s e ts f o r th th e p e r s o n s to w h o m p u b lic as si st ance i s pay abl e und erthatchapt er . S peci fi ca l l y, A l abam a C od e § 38 -4-1 st at es i n rel ev an tp artas fo l l o w s: § 3 8-4-1. P er son s t o w h om p u b l i c ass i st an ce p ay ab l e. (a) G en er al l y. – P ub l i c a ss i st ance shal l be payabl e und erthi s c hapt er t o o ro n b e h a l f

o f a n y p e r s o n w h o i s an e e d y b l i n d p e r s o n w i th i n t he r e qui r e m e nt s of

thi s c hapt e r , ori s a ne e dy pe r s on ove rthe ag e of 65 y e a r s w ith in th e r e q u ir e m e n ts o f th is c h ap te r , o ris a d e p e n d e n t c h ild w i thi n the r e qui r e m e nt s of thi s c hapt e r , orw ho i s pe rm a ne nt l y a nd to ta lly d is ab le d w ith in th e r e q u ir e m e n ts o f th is c h ap te r . . . . (E m ph as i s a dd ed. ) I n add i t i on , other s ec t i on s of A l abam a C od e T i t l e 38, C hapt er4 es t abl i sh a proce du re for the prov i si on of ce rt ai n st at e pub l i c a ss i st ance un der that ch ap ter. S ee A la. C o d e § 3 8 -4 -1 (1 9 7 5 ), et se q . A cc o rd in g to th e T ru stee ’s ar gu m ent , the exem pt i on i n § 38 -4-8 cont em pl at es on l y the st at e pub l i c a ss i st ance9

a v a ilab le u n d e rth a t c h ap te r . T h e T ru s te e ’s in te rp r e ta tio n is c o n tr a ryto th e p la in la n g u a g e o f § 3 8 - 4 - 8 . S ec t i on 38 -4-1 do es no tdefi ne, and d oes notpu rportt o d ef i ne, “ pu bl i c a ss i st ance ” as thatt erm i s use d i n § 38 -4-8. R ather, § 3 8-4-1 si m pl y pre sc ri bes apart i cul ar f o rm o f s ta te p u b lic a s s is ta n c e th a t is p a y ab le u n d e rth is c h ap te r . O n th e o th e rh a n d , th e e x e m p tio n s e t f o r th in § 3 8 - 4 - 8 e x p lic itly ap p lie s to “[ a ]ll a m o u n ts p a id o rp a y ab le a s p u b lic a s s is ta n c e to n e e d y p e r s o n s ,” n o t to p u b lic a s s i s t a n c e p a y ab l e u n d e rth i s c h ap t e r( e mp h a s i s a d d e d ) . H a d th e A l ab a ma l e gi s l a tur e i nt e nde d t o r e s tr i c tthe e xe m pt i on i n § 38- 4- 8 t o the pa r t i c ul a rf orm of st at e p u b l i c assi st an ce p ayab l e u n d er ch ap t er 4 o f t i t l e 3 8 , i teasi l y co u l d h av e so s pe c i f i e d. I n f a c t , a s out l i ne d above , the l e gi s l a tur e s o s pe c i f i e d i n § 38- 4- 1. Inst ea d, the l egi sl ature c ho se i n § 38 -4-8 t o exem pt“ al l ” pub l i c a ss i st ance pa y m e nt s , a nd w e m us tgi ve m e a ni ng t o the w or ds c a r e f ul l y c hos e n by the l e gi s l a tur e . A s the di s tr i c tc our tpr ope r l y not e d i n I n r e B r a s he r , 253 B . R . 484, 488 ( M . D . A l a . 2000) , “ the f a c ttha tthe A l aba m a l e gi s l a tur e e m pl oy e d m odi f y i ng t e rm s [ s uc h a s ‘ unde rthi s c hapt e r ’ ] f or‘ publ i c a s s i s t a nc e ’ i n s om e s e c t i ons of the t i t l e butnoti n § 38- 4- 8 i s m or e pl a us i bl y r e a d a s ade l i be r a t e c hoi c e nott o l i m i tthe br e a dth of

the publ i c - a s s i s t a nc e e xe m pt i on i n § 38- 4- 8. ” T hus , ourabove concl usi on thatE IT C paym ent s c on st i tut e “ pu bl i c a ss i st ance ” f or pu rposes of the §This Court denies the Trustee ’s motion to certify to the Alabama

Supreme Court the 4 question of whether EITC pay ments qualify

as “public a ssistance”for pur poses of the ex emption established in Alaba

ma Code § 38-4- 8. I f wehave misinterpreted the le g islative intent of § 38- 4- 8, theAl a

bama le g isl atureis f

re eto a mend thestatuteto c lari fy

itstr ueintent, and

c an do s o without the interpretation of the Alabama Supreme Court. The Tr ustee also argues (1) that the qualifications for rec eipt of EITC arevery different 5 from those for

state public assistanceunder chapter 4 of title 38, and (2) that the exemption of EITC pay ments more than doubles theamounts of some debtors’ exemptions . We do not doubt that the inclusion of EITC pay ments amongexempt property may profoundly

aff ect both the c la ss o f debto rsa

bleto c laim pub lic -a ssi sta nc ee xemp tio ns and

theamou ntsof c ertain debto rs ’ exemptions . However, for the re asons stated herein, weconcludethat the Alabama leg islature enac ted such e ffe cts, and it is not our placeto evaluatethe wisdom of the leg islature’s policy choice . 10 38- 4- 8 e xe m pt i on i s una f f e c t e d by § 38- 4- 1. 4 W e not e thatou r dec i si on i n thi s r egar d i s c on si st entw i th the on l y other c o u r t th a t h a s in te rp r e te d th is A lab a m a e x e m p tio n a n d w ith m o s t c o u r ts i n t e rp r e t i n g s i mi l a rs t a tu t e s e n a c t e d i n o th e rs t a t e s . Se e I n r e Br a s h e r , 2 5 3 B. R. 4 8 4 , 4 8 8 ( M .D . A la . 2 0 0 0 ) ( c o n c lu d in g th a t E I T C p a y m e n ts w e r e ‘p u b lic a s s i s t a nc e ’ f

orpurpos e s of

A l aba m a C ode § 38- 4- 8) ; s e e a l s o, e . g. , F l a ne ry v. M athi son, 28 9 B . R . 62 4, 62 8-29 (W . D . K y. 20 03 ) ( E IT C paym ent s e xem ptun der K e n tu c k y s t a tu t e e x e mp t i n g p u b l i c a s s i s t a n c e b e n e f i t s ) ; I n r e To mc z y k , 2 9 5 B. R. 89 4, 89 7 (B ankr. D . M i nn . 20 03 ) ( sa m e, un der M i nn es ot a e xem pt i on ); In re L o n g s tr e e t , 2 4 6 B . R . 6 1 1 , 6 1 7 ( B a n k r . S . D. I o wa2 0 0 0 ) ( s a m e , u n d e rI o wa exem pt i on ); In re B rockho use, 22 0 B . R . 62 3, 62 5 (B ankr. C . D . Il l . 19 98 ) ( sa m e, un der I l l i no i s e xem pt i on ). 5 C . Lum p- Sum EI TC R e f undThe Tr ustee’s a rgument that Congress pre fer s the rata ble-monthly-credit option is based 6 on the followinglanguag e in 26 U.S.C. § 3507: (f) Internal Revenue Ser

vice notification.—The Internal Revenue Service shall take such steps as may

be appropriate to ensure that t axpayers who ha ve 1 or more qualifying children and who rec eive a ref und of the credit under section 32 areawa re of the availability

of ea rned inc ome adva

nce a mounts under this section. 26 U.S.C. § 3507(f). We do not view this provision as any indication that Congress pre fer s one method over a

nother. In any

event, even if Congress view ed the monthly-pay ment method as pref era ble, that pre ferencedoes not aff ect our analysis of the entirely

different question of whether a lump-sum pay

ment is “public assistance ” and theref ore ex empt. 11 T he T rus t e e a l s o a r gue s tha t , e ve n i f E I T C s a r e ge ne r a l l y e xe m ptunde r§ 38- 4- 8 , E IT C p aym en t s l o se th ei r ch aract er as t ax cred i t s an d b eco m e si m p l e refu n d s, w hi c h a r e note xe m pt , w he n the de bt ore l e c t s t o r e c e i ve the E I T C a s a l um p- s um r e f und. T hi s a r gum e nti s una va i l i ng. U n li k e s o m e tax cr ed it s, an E IT C is “ref u n d ab le.” T h at is, i f a n in d iv id u al’s E IT C exce eds hi s or hert ax l i abi l i ty, the exces s a m ou nti s l abel ed an “o v e rp a y m e n t” a n d is r e f u n d e d to th e in d iv id u a l a s if th e in d iv id u a l o v e rp a id in t a xe s . S e e S or e ns on, 475 U . S . a t854- 55, 106 S . C t . a t1603- 04; 26 U . S . C . §§ 6 4 0 1 ( b ) , 6 4 0 2 ( a ) . A t a x p a y e rc a n e l e c tt o r e c e i v e ( 1 ) a n y EI TC a mo u n t s i n a l u mp s u m a s a ta x r e f

u n d , o r( 2 ) a r a tab le p o r tio n o f th e E I T C a m o u n t w ith e a c h p a y r o ll c h e c k . T h e T ru s te e a r g u e s th a t th is s e c o n d o p tio n is th e “p r e f e rr e d ” m e th o d a n d is m or e c ons i s t e ntw i th C ongr e s s ’ s i nt e ntt o pr ovi de r e l i e f t o l ow - i nc om e w a ge e a rn e r s a n d to m itig a te th e e f f e c ts o f S o c ia l S e c u r ity ta x e s . T h e T ru s te e a r g u e s , in 6 rel i an ce o n S o ren so n , th atw h en a d eb t o r el ect s t o recei v e an E IT C p aym en tas a12

l um p- s um r e f

und, the pa y m e ntbe c om e s a n “ ove rpa y m e nt ” r a the rtha n a c r e di t , a nd is n o n - e x e m p t p r o p e r ty , ju s t lik e a n y o th e rr e f u n d . T he T rus t e e ’ s r e l i a nc e on S or e ns on f orthi s a r gum e nti s m i s pl a c e d, a nd the T rust ee offe rs no other autho ri ty f or hi s posi t i on . In S orenson, the S up re m e C ou rt i nt e rpr e t e d the t a x- i nt e r c e ptl a w , w hi c h di r e c t s the S e c r e t a ry of the T r e a s ury ( the

“ S e c r e t a ry ” ) t o i nt e r c e ptt a x- r e f und pa y m e nt s othe rw i s e pa y abl e t o t a xpa y e r s w ho ow e pas t -due chi l d-supp ortpaym ent s thathave been ass i gn ed t o the S ec re t ary. S ee 42 U . S . C . 66 4(a) ; 26 U . S . C . § 6 40 2(c) . In S orenson, the t axpaye r a nt i ci pat ed a t ax r e f u n dc o n s is tin g in p a r t o f a n E I T C p a y m e n t. 4 7 5 U .S . a t 8 5 5 , 1 0 6 S . C t. a t 1 6 0 4 . T h e I n te rn a l R e v e n u e S e rv ic e ( “I R S ” ) , h o w e v e r , n o tif ie d th e ta x p a y e rth a t a por t i on of

the a nt i c i pa t e d r e f

und w a s be i ng r e t a i ne d by the I R S pur s ua ntt o the t a xi nt e r c e ptl a w . I d. “ T he t a x- i nt e r c e ptl a w e s s e nt i a l l y di r e c t s the S e c r e t a ry t o gi ve p r io r ity to a S ta te ’s c la im f o rr e c o u p m e n t o f

w e lf a r e p a y m e n ts m a d e to a f a m ily w ho fa i l ed t o rec ei ve chi l d sup po rt. . . ov eran i nd i vi du al ’ s c l ai m for r ef un d o f t ax o v e rp a y me n t . ” So r e n s o n , 4 7 5 U . S. a t8 5 6 , 1 0 6 S. Ct . a t1 6 0 4 . Fu r th e r , 2 6 U . S. C. § 6402( c ) pr ovi de s tha t“ [ t ] he a m ountof a ny ove rpa y m e ntt o be r e f unde d t o the pe r s on m a ki ng the ove rpa y m e nts ha l l be r e duc e d by the a m ountof a ny pa s t - due s uppor t. . . ow e d by tha tpe r s on of w hi c h the S e c r e t a ry ha s be e n not i f i e d. . . . ” T he S upr e m e C our ti n S or e ns on he l d tha tE I T C r e f unds a r e s uc h “ ove rpa y m e nt s ” a nd13

a r e s ubj e c tt o r e duc t i on f orpa s t - due c hi l d s uppor t . S or e ns on, 475 U . S . a t865, 106 S . C t. a t 1 6 0 9 . T h e S u p r e m e C o u r t ’ s S o r e n s o n d e c i s i o n i s i n ap p o s i t e h e r e . Wh i l e we r e c o g n i z e th a ta n EI TC r e f u n d i s a n “ o v e rp a y me n t ” f o rp u rp o s e s o f

2 6 U . S. C. § 6 4 0 2 ( c ) , th a t d e s ig n a tio n h a s n o b e a r in g o n th e d is tin c tly d if f e r e n t is s u e in th is c a s e , w h ic h d o e s n o t in v o lv e p a s t- d u e c h ild s u p p o r t o rth e ta x - in te r c e p t la w . W hether a n E IT C paym enti s acr edi t , a r ef un d, or an ov erpaym entdo es no taf fe ct th e f a c t th a t it is “p u b lic a s s is ta n c e ” f o rp u rp o s e s o f

A lab a m a C o d e § 3 8 - 4 - 8 a n d is there fore exem pt . T he T rust ee do es no toffe r a ny supp ortfor i t s c on t ent i on thatan E I T C pa y m e nts om e how l os e s i t s “ publ i c a s s i s t a nc e ” c ha r a c t e rw he n i ti s pa i d i n a l um p sum . W e thu s c on cl ud e thatan E IT C paym enti s e xem ptun der § 38 -4-8 reg ard l ess o f w h eth er a d eb t o r el ect s t o recei v e i ti n m o n th l y p aym en t s o r as a lu m p - s u m r e f

u n d . I I I . CONCL US I ON Fo rth e f o r e g o i n g r e a s o n s , w e a f f i rm th e d i s tr i c tc o u r t ’ s o r d e r , w h i c h a f f i r ms th e b an k ru p t cy co u rt ’ s o v erru l i n g o f th e T ru st ee’ s o b j ect i o n s t o th e D eb t o rs’ e x e m p tio n s . AF F I RME D.