Court Opinion

ID: 9693613
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:52:30.79574+00
Date Added: 2024-06-11T18:19:48.926348
License: Public Domain

THOMAS H. FULTON, Bankruptcy Appellate Panel Judge,
dissenting.
The other members of this Panel (the “Panel”) have made a superb effort to weave a seemingly robust cloth from somewhat thin threads. I must, however, respectfully dissent. In doing so, I join with the majority of the bankruptcy courts and the overwhelming majority of appellate courts across the United States that have considered this issue, including the 8th and 9th Circuit BAPs. See, e.g., In re Wilson, 383 B.R. 729, 732-33 (8th Cir. BAP 2008) (“[Wjhile bankruptcy courts have been divided on this issue, the appellate courts considering this question have all concluded that a vehicle ownership expense is only applicable if a debtor is in fact incurring such an expense.”). Numerous jurists have considered this issue, and their rationales both for and against permitting debtors to deduct more than actual vehicle ownership expenses vary to some extent. See, e.g., Grossman v. Sawdy (In re Sawdy), 384 B.R. 199, 202 (E.D.Wis.2008). I will not retrace the well-worn paths around both sides of the issue. Rather, I would simply note my own particular concerns.
It is my belief that the Panel primarily falls short in misinterpreting the word “applicable” in the first sentence of 11 U.S.C. § 707(b)(2)(A)(ii)(I). The first sentence of 11 U.S.C. § 707(b)(2)(A)(ii)(I) states that “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides .... ” (emphasis added.) The Panel believes that “applicable” simply directs the debtor to pick out and use the dollar amounts set forth in tables published by the Internal Revenue Service (“IRS”) as part of its National Standards and Local Standards without reference to the IRS’s guidelines for using those tables. In the Panel’s words, the debtor will “just look them up.”
I believe, however, that if “applicable” is to have any meaning at all in the context of 11 U.S.C. § 707(b)(2)(A)(ii)(I)10, the debtor must look to the IRS’s guidelines regarding the use of the tables set forth in the National Standards and Local Standards to determine the amount of expenses that may be “applied” to reduce the debtor’s monthly income.11 If Congress *533really did intend that the debtor just pull numbers from tables, the word “applicable” would not have been necessary in the first sentence of 11 U.S.C. § 707(b)(2)(A)(ii)(I). The provision could simply have been written omitting the word “applicable” without changing its meaning, as follows: “The debtor’s monthly expenses shall be the debtor’s monthly expense amounts specified under the National Standards and Local Standards .... ” On the other hand, Congress’ use of the word “applicable” makes a great deal of sense if one believes that Congress intended that the IRS’s guidelines be used in consulting the National Standards and Local Standards.
Moreover, although the Panel believes that the relevant dollar amounts can be obtained from the National Standards and Local Standards if one were to “just look them up,” that belief carries with it a built-in prejudice colored by the Panel’s desired result. It is, simply put, boot-strapping. If one were to view the tables in the National Standards and Local Standards neutrally, it becomes obvious that one cannot really “just look up” dollar amounts in the tables without either referring to IRS guidelines for using the tables12 or imposing pre-existing assumptions about how the tables are to be navigated.
Consider the table titled “Operating Costs” in the IRS Local Standards for “transportation.”13 The table consists of a heading, “Operating Costs,” a column labeled “One Car” with dollar amounts beneath, a column labeled “Two Cars” with dollar amounts beneath, and a column appearing to be divided by region-Northeast, Midwest, South, West — and further divided by what appears to be larger cities or metropolitan areas. The table alone does not describe the geographical boundaries of each “region” or “city.” Also, the table by itself does not tell a reader what the dollar amounts mean or how they are to be used. One must use the IRS guidelines-at least some of which appear on the same page as the table — first to locate the appropriate geographical location heading (ie., which Region or “city”) and then to determine whether and how either amount is “applicable.”
The Panel also makes too much of Congress’s use of the phrase “actual expenses” in 11 U.S.C. § 707(b)(2)(A)(ii)(I) with regard to “the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides[.]” The Panel contrasts Congress’s use of the phrase “applicable monthly expense amounts” with respect to the IRS National Standards and Local Standards and comes to the unwarranted conclusion that Congress must have intended that the two phrases have opposite, rather than merely different, meanings. I, however, believe that Congress intended and used the phrases “applicable monthly expense amounts” in the former case and “actual expenses” in the latter case simply in recognition of the differing ways in which the IRS uses the National Standards and Local Standards versus the Other Necessary Expenses categories.
*534According to IRS guidelines, depending on the type of expense being considered, persons may claim the full amount set forth in the pertinent table — e.g., National Standards for “food, clothing and other expenses” and “out-of-pocket health care expenses”-or actual expenses up to the cap amount set forth in the pertinent table-e.g. Local Standards for “housing and utilities” and “transportation.” Thus, it would have made no sense for Congress to have used the phrase “actual expenses” in the context of the National Standards and Local Standards because the expenses ultimately allowed might or might not be the person’s actual expenses, depending on the nature of the expense and, in the case of housing, utilities and transportation expenses, whether the same exceeded the caps. Conversely, it makes eminent sense for Congress to have used “actual expenses” in the context of Other Necessary Expenses because the allowable expenses there are limited to the person’s actual expenses that he or she can demonstrate are reasonable under that person’s particular facts and circumstances.
Finally, the Panel’s interpretation of the first sentence of 11 U.S.C. § 707(b)(2)(A)(ii)(I) will lead to results that are both absurd and at odds with Congressional intent. A simple illustration demonstrates this. Suppose, for example, that there is a debtor with nominal actual monthly expenses whose “current monthly income” multiplied by twelve is just one dollar above the applicable median income. Given the Panel’s interpretation of 11 U.S.C. § 707(b)(2)(A)(ii)(I), that debtor would be required to claim the full amounts set forth in the tables in the National Standards and Local Standards even though that debtor’s actual expenses are significantly lower. When subtracted from the debtor’s “current monthly income,” such table-derived amounts could cause the debtor’s “disposable income” to be negative and, therefore, insufficient to fund a confirmable Chapter 13 plan, whereas subtracting the debtor’s actual expenses would not have such an effect. Contrast this result with a second debtor who has exactly the same actual expenses as the first debtor, and whose current monthly income multiplied by twelve is just one dollar less than that of the first debtor. The second debtor would be allowed to use his/her actual expenses to derive his/her disposable income and, accordingly, would be able to fund a confirm-able Chapter 13 plan. The absurdity becomes readily apparent-a higher income debtor would be unable to propose a con-firmable Chapter 13 plan whereas a slightly lower income debtor with exactly the same expenses would be able to propose a confirmable Chapter 13 plan.
Even if the above-median debtor could propose a confirmable Chapter 13 plan, he or she would be paying less to his/her creditors than the under-median income debtor. Thus, not only would the result be absurd, it would run directly contrary to Congressional intent. As noted by the 8th Circuit BAP in In re Wilson, “[ajlthough the legislative history to BAPCPA is scant and often difficult to piece together, there can be no doubt that the purpose of these amendments to §§ 707(b) and 1325(b) was to require above-median income debtors to make more funds available to their unsecured creditors, and to do so by limiting the court’s authority to allow expenses.” In re Wilson, 383 B.R. at 733.
As has been said many times before, nearly to the point of becoming a cliche, reasonable minds can and will differ. For the foregoing reasons, I respectfully dissent from the Panel’s decision.

. As the Panel correctly notes, rules of statutory construction require that meaning must be given to a statute's every word. Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979).

. Some of these guidelines are included in the IRS Collection Financial Standards, available at http://www. irs.gov/individuals/arti-cle/0„id=96543.00, which also include the tables that the Panel would have debtors use to "just look up” their expenses. Guidelines also are contained in greater detail in the Internal Revenue Service Manual, Financial Analysis Handbook, Pt. 5, ch. 15 § 5.15.1.7, available at http://www.irs.gov/irm/part5/chl5 s Ol.html# d0e200408. In general, the IRS *533intends that dollar amounts set forth in the tables in the Local Standards for "transportation” expenses be used as "caps” — the person in question may claim actual expenses up to those amounts.

. Notably, guidelines appearing on the same page as the table also state that "[t]he taxpayer is allowed the amount actually spent, or the standard, whichever is less.” Surely the Panel does not suggest that we apply only some of the instructions and explanations and ignore others.

. Available at http: //www.irs.gov/ businesses/small/article/0„id= 104623,00. html.