Case Summary:
The debtors received their 2009 tax refunds after they filed bankruptcy. They filed amended schedules in which they sought to exempt the tax refunds as “depository accounts” under Wis. Stat. § 815.18(3)(k). The bankruptcy trustee objected to the exemption, contending that the refunds did not constitute a “depository account” as defined by § 815.18(2)(e). While recognizing that the exemption laws are to be liberally construed in favor of the debtors, the Court also noted that under Wisconsin law courts are obligated to enforce the statute as written and not create exemptions which the legislature has not authorized. While some people may use their tax withholding as a form of forced savings, a tax refund is not sufficiently akin to the sorts of accounts listed in Wis. Stat. § 815.18(2)(e), nor is the government sufficiently similar to the types of financial institutions contemplated by the statute. At the time of filing, the debtors held a right to receive a tax refund which was property of the estate and did not qualify for exemption under Wis. Stat. § 815.18(3)(k). The trustee’s objection was sustained.
Statute/Rule References:
Wis. Stat. § 815.18 -- Exemptions
Key Terms:
Exemptions (Tax Refunds)