Keywords: means test allowances . vehicle allowance . $200 clunker allowance . IRS standards . means test . autos .
Means Test > Expenses > IRS Allowances > Vehicles > Operation & Maintenance Local Standards: Does Allowance include IRS's additional $200 allowance for Operating Expense for Older/High Mileage Vehicles?18 Cases , IssueID 2 |
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Ch 7 Means Test |
Ch 13 Means Test |
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Topic Description:At one time, (before the Supreme Court ruled on the Ransom case), the court rulings and trustees routinely agreed that even if a debtor does not have lease or loan obligation, they are still entitled to an extra $200 operating expense allowance for vehicles more than 75K miles or six years old. Lines of Cases:
Topic Background / Overview: |
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Debtors are allowed a $200 operating expense for old vehicles. In re Byrn, 410 B.R. 642 (Bankr. D. Mont. 2008); Internal Revenue Manual, Financial Analysis Handbook, Part 5, Chapter 8
Debtors who own old or high mileage cars "free and clear," are entitled to an extra $200 per month operating expense. Also, a "free and clear" owner is not "stuck" with the vehicle operating expenses allowed under the IRS Standards. Section 707(b)(2)(B) is also available for "above the median" Chapter 13 debtors. Section 707(b)(2)(B), allows additional expenses based on "special circumstances."
However, as the court in Carlin noted:
Numerous safeguards are in place to protect both debtors and creditors. Debtors who own old or high mileage cars "free and clear," are entitled to an extra $200 per month operating expense. Also, a "free and clear" owner is not "stuck" with the vehicle operating expenses allowed under the IRS Standards. Section 707(b)(2)(B) is also available for "above the median" Chapter 13 debtors. Section 707(b)(2)(B), allows additional expenses based on "special circumstances."
348 B.R. at 798 (citations omitted). We agree with the court in Carlin and conclude that the debtor's appeal to equity is unavailing.
The Court must decide whether Debtors may claim an additional $200 operating expense in calculating their projected disposable income. Upon consideration, the Court finds that Debtors may not claim the additional expense for several reasons. First and foremost, the Bankruptcy Code provides that a debtor's expenses are to be defined by the standards promulgated by the IRS, not by the IRM; the IRM is neither incorporated into the IRS Local Standards nor the Bankruptcy Code. Debtors are also not entitled to a deduction merely because they anticipate that they may later incur additional expenses because their vehicles are more than six years old. Congress intended for Chapter 13 debtors to pay the maximum amount that they could afford and disallowing the additional deduction, where there is no proof of the actual expense, furthers that policy.
denied the additional $200 old-car operating expense on the basis that it does not appear in the IRS Standards and that allowing the expense would be inconsistent with the Code
denied the additional $200 old-car operating expense on the basis that it does not appear in the IRS Standards and that allowing the expense would be inconsistent with the Code
While above-median income Chapter 13 debtors are not automatically entitled to take a $200 per month additional operating expense for an old motor vehicle, such debtors may claim an additional vehicle operating expense they actually incur for operating an older vehicle.
Debtors' monthly disposable income shown on line 59 of Form 22C is $314.93, inclusive of the vehicle ownership expense deduction for the Firebird. The Firebird is more than six years old and has over 75,000 miles. Debtors are therefore permitted to deduct an additional $200 operating expense on line 27.[4] If the vehicle ownership deduction is disallowed for the Firebird but a $200 operating deduction is allowed due to its age/mileage, these adjustments yield a monthly disposable income figure of $603.93.[5]
debtors were limited to the expenses allowed by the IRS Standards only, disallowing the $200 allowance for older cars because it did not appear in the means test and expenses outside the means test may only be argued as a special circumstance.
the IRS Standards permit debtors who own old or high mileage cars "free and clear" to claim an extra $200 per month in operating expenses,[Fn.12] which the Wilsons can do in this case
[Fn.1] As other courts have noted, an additional operating expense of $200 is allowed such a taxpayer on a car that is over six years old and has reported mileage of 75,000 or more. In re Ransom, 380 B.R. 799 (9th Cir.BAP 2007).
The Court must decide whether Debtors may claim an additional $200 operating expense in calculating their projected disposable income. Upon consideration, the Court finds that Debtors may not claim the additional expense for several reasons. First and foremost, the Bankruptcy Code provides that a debtor's expenses are to be defined by the standards promulgated by the IRS, not by the IRM; the IRM is neither incorporated into the IRS Local Standards nor the Bankruptcy Code. Debtors are also not entitled to a deduction merely because they anticipate that they may later incur additional expenses because their vehicles are more than six years old. Congress intended for Chapter 13 debtors to pay the maximum amount that they could afford and disallowing the additional deduction, where there is no proof of the actual expense, furthers that policy.
denied the additional $200 old-car operating expense on the basis that it does not appear in the IRS Standards and that allowing the expense would be inconsistent with the Code
denied the additional $200 old-car operating expense on the basis that it does not appear in the IRS Standards and that allowing the expense would be inconsistent with the Code
While above-median income Chapter 13 debtors are not automatically entitled to take a $200 per month additional operating expense for an old motor vehicle, such debtors may claim an additional vehicle operating expense they actually incur for operating an older vehicle.
Debtors are allowed a $200 operating expense for old vehicles. In re Byrn, 410 B.R. 642 (Bankr. D. Mont. 2008); Internal Revenue Manual, Financial Analysis Handbook, Part 5, Chapter 8
Debtors' monthly disposable income shown on line 59 of Form 22C is $314.93, inclusive of the vehicle ownership expense deduction for the Firebird. The Firebird is more than six years old and has over 75,000 miles. Debtors are therefore permitted to deduct an additional $200 operating expense on line 27.[4] If the vehicle ownership deduction is disallowed for the Firebird but a $200 operating deduction is allowed due to its age/mileage, these adjustments yield a monthly disposable income figure of $603.93.[5]
Debtors who own old or high mileage cars "free and clear," are entitled to an extra $200 per month operating expense. Also, a "free and clear" owner is not "stuck" with the vehicle operating expenses allowed under the IRS Standards. Section 707(b)(2)(B) is also available for "above the median" Chapter 13 debtors. Section 707(b)(2)(B), allows additional expenses based on "special circumstances."
debtors were limited to the expenses allowed by the IRS Standards only, disallowing the $200 allowance for older cars because it did not appear in the means test and expenses outside the means test may only be argued as a special circumstance.
the IRS Standards permit debtors who own old or high mileage cars "free and clear" to claim an extra $200 per month in operating expenses,[Fn.12] which the Wilsons can do in this case
[Fn.1] As other courts have noted, an additional operating expense of $200 is allowed such a taxpayer on a car that is over six years old and has reported mileage of 75,000 or more. In re Ransom, 380 B.R. 799 (9th Cir.BAP 2007).
However, as the court in Carlin noted:
Numerous safeguards are in place to protect both debtors and creditors. Debtors who own old or high mileage cars "free and clear," are entitled to an extra $200 per month operating expense. Also, a "free and clear" owner is not "stuck" with the vehicle operating expenses allowed under the IRS Standards. Section 707(b)(2)(B) is also available for "above the median" Chapter 13 debtors. Section 707(b)(2)(B), allows additional expenses based on "special circumstances."
348 B.R. at 798 (citations omitted). We agree with the court in Carlin and conclude that the debtor's appeal to equity is unavailing.
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