Source: http://supreme.nolo.com/us/562/09-907/opinion.html
Timestamp: 2019-12-09 20:55:33
Document Index: 740911599

Matched Legal Cases: ['§5', '§704', '§707', '§707', '§5', 'art5', '§5', '§1325', '§707', '§707']

Ransom v. FIA Card Services, N. A. 562 U. S. ____ - Volume 562 - Docket Number 09-907 - 2011 - Opinion - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 562 > Ransom v. FIA Card Services, N. A. 562 U. S. ____ 09-907 (2011) > Opinion
Ransom v. FIA Card Services, N. A. 562 U. S. ____ - 09-907 (2011)
JASON M. RANSOM, PETITIONER v. FIA CARD SERVICES, N. A., fka MBNA AMERICA BANK, N. A.
Because we conclude that a person cannot claim an allowance for vehicle-ownership costs unless he has some expense falling within that category, the question in this case becomes: What expenses does the vehicle-ownership category cover? If it covers loan and lease payments alone, Ransom does not qualify, because he has no such expense. Only if that category also covers other costs associ- ated with having a car would Ransom be entitled to this deduction.
The less inclusive understanding is the right one: The ownership category encompasses the costs of a car loan or lease and nothing more. As noted earlier, the numerical amounts listed in the “Ownership Costs” table are “base[d] … on the five-year average of new and used car financing data compiled by the Federal Reserve Board.” App. to Brief for Respondent 3a. In other words, the sum $471 is the average monthly payment for loans and leases nationwide; it is not intended to estimate other conceivable expenses associated with maintaining a car. The Standards do account for those additional expenses, but in a different way: They are mainly the province of the separate deduction for vehicle “Operating Costs,” which include payments for “[v]ehicle insurance, … maintenance, fuel, state and local registration, required inspection, parking fees, tolls, [and] driver’s license.” Internal Rev- enue Manual §§5.15.1.7 and 5.15.1.8 (May 1, 2004), reprinted in App. to Brief for Respondent 16a, 20a; see also IRS, Collection Financial Standards (Feb. 19, 2010), http://www.irs.gov/individuals/article/0,,id=96543,00.html.[Footnote 6] A person who owns a car free and clear is entitled to claim the “Operating Costs” deduction for all these expenses of driving—and Ransom in fact did so, to the tune of $338. But such a person is not entitled to claim the “Ownership Costs” deduction, because that allowance is for the separate costs of a car loan or lease.
Chapter 13 borrows the means test from Chapter 7, where it is used as a screening mechanism to determine whether a Chapter 7 proceeding is appropriate. Individuals who file for bankruptcy relief under Chapter 7 liquidate their nonexempt assets, rather than dedicate their future income, to repay creditors. See 11 U. S. C. §§704(a)(1), 726. If the debtor’s Chapter 7 petition discloses that his disposable income as calculated by the means test exceeds a certain threshold, the petition is presumptively abusive. §707(b)(2)(A)(i). If the debtor cannot rebut the presumption, the court may dismiss the case or, with the debtor’s consent, convert it into a Chapter 13 proceeding. §707(b)(1).
The National Standards designate allowances for six categories of expenses: (1) food; (2) housekeeping supplies; (3) apparel and services; (4) personal care products and services; (5) out-of-pocket health care costs; and (6) miscellaneous expenses. Internal Revenue Manual §5.15.1.8 (Oct. 2, 2009), http://www.irs.gov/irm/part5/irm_05-015-001.html#d0e1012 (all Internet materials as visited Jan. 7, 2011, and available in Clerk of Court’s case file). The Local Standards authorize deductions for two kinds of expenses: (1) housing and utilities; and (2) transportation. Id., §5.15.1.9.
This interpretation also avoids the anomalous result of granting preferential treatment to individuals with above-median income. Because the means test does not apply to Chapter 13 debtors whose incomes are below the median, those debtors must prove on a case-by-case basis that each claimed expense is reasonably necessary. See §§1325(b)(2) and (3). If a below-median-income debtor cannot take a deduction for a nonexistent expense, we doubt Congress meant to provide such an allowance to an above-median-income debtor—the very kind of debtor whose perceived abuse of the bankruptcy system inspired Congress to enact the means test.
In addition, the IRS has categorized taxes, including those associated with car ownership, as an “Other Necessary Expens[e],” for which a debtor may take a deduction. See App. to Brief for Respondent 26a; Brief for United States as Amicus Curiae 16, n. 4.
Because the dissent appears to misunderstand our use of the Collection Financial Standards, and because it may be important for future cases to be clear on this point, we emphasize again that the statute does not “incorporat[e]” or otherwise “impor[t]” the IRS’s guidance. Post, at 1, 4 (opinion of Scalia, J.). The dissent questions what possible basis except incorporation could justify our consulting the IRS’s view, post, at 4, n., but we think that basis obvious: The IRS creates the National and Local Standards referenced in the statute, revises them as it deems necessary, and uses them every day. The agency might, therefore, have something insightful and persuasive (albeit not controlling) to say about them.
The parties and the Solicitor General as amicus curiae dispute the proper deduction for a debtor who has expenses that are lower than the amounts listed in the Local Standards. Ransom argues that a debtor may claim the specified expense amount in full regardless of his out-of-pocket costs. Brief for Petitioner 24–27. The Government concurs with this view, provided (as we require) that a debtor has some expense relating to the deduction. See Brief for United States as Amicus Curiae 19–21. FIA, relying on the IRS’s practice, contends to the contrary that a debtor may claim only his actual expenditures in this circumstance. Brief for Respondent 12, 45–46 (arguing that the Local Standards function as caps). We decline to resolve this issue. Because Ransom incurs no ownership expense at all, the car-ownership allowance is not applicable to him in the first instance. Ransom is therefore not entitled to a deduction under either approach.
For the same reason, the allowance for “applicable monthly expense amounts” at issue here differs from the additional allowances that the dissent cites for the deduction of actual expenditures. See post, at 3–4 (noting allowances for “actual expenses” for care of an elderly or chronically ill household member, §707(b)(2)(A)(ii)(II), and for home energy costs, §707(b)(2)(A)(ii)(V)).
The interpretive problem is not, as the dissent suggests, “whether to claim a deduction for one car or for two,” post, at 3, but rather whether to claim a deduction for any car that is owned if the debtor has no ownership costs. Indeed, if we had to decide this question on the basis of the table alone, we might well decide that a debtor who does not make loan or lease payments cannot claim an allowance. The table, after all, is titled “Ownership Costs”—suggesting that it applies to those debtors who incur such costs. And as noted earlier, the dollar amounts in the table represent average automobile loan and lease payments nationwide (with all other car-related expenses approximated in the separate “Operating Costs” table). See supra, at 9–10. Ransom himself concedes that not every debtor falls within the terms of this table; he would exclude, and thus prohibit from taking a deduction, a person who does not own a car. Brief for Petitioner 33. In like manner, the four corners of the table appear to exclude an additional group—debtors like Ransom who own their cars free and clear and so do not make the loan or lease payments that constitute “Ownership Costs.”
Because Ransom does not make payments on his car, we need not and do not resolve how the “notwithstanding” sentence affects the vehicle-ownership deduction when a debtor has a loan or lease expense. See Brief for United States as Amicus Curiae 23, n. 5 (offering alternative views on this question); Tr. of Oral Arg. 51–52.
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