On an issue dividing the lower courts, Bankruptcy Judge Alan S. Trust of Central Islip, N.Y., ruled that a single individual can claim a deduction for two automobiles in calculating the means test to determine whether the debtor’s case represents “presumptive abuse.”
The U.S. Trustee filed a motion to dismiss, contending that the debtor could take a deduction for only one automobile. If one of the deductions were eliminated, the debtor would have failed the means test, and his case would have been dismissed for presumptive abuse under Section 707(b)(2) unless he were to convert to chapter 13.
In his Jan. 11 opinion, Judge Trust analyzed the case as a question of statutory construction.
On line 11 of Form 122A-2, the debtor claimed ownership of two cars. On line 12, he listed auto expenses of $616, the exact amount shown on the IRS Local Standards for the New York metropolitan area for someone who owns two cars.
The trustee argued that the court instead should follow the IRS Handbook, which allows a single person a deduction for only one car.
Judge Trust said that Section 707(b)(2)(A)(ii)(1) does not tell the court to refer to the IRS Handbook. Rather, he said, the subsection says the deduction “shall be” determined by the National and Local Standards. The Local Standards applicable to autos allow a deduction for one or two autos “and [do] not expressly limit a single-person household debtor’s operation costs to one vehicle,” the judge said.
The “fact that the IRS Handbook could be read to conflict with the statute and official form is irrelevant for a presumed abuse case, because Congress did not expressly build the IRS Handbook into the statute nor did the Judicial Conference of the U.S. build the IRS Handbook into the official form,” Judge Trust said.
Consequently, Judge Trust found no presumed abuse because he allowed the single debtor with no dependents to take deductions for the two autos he owned. He held that “the IRS Handbook is not controlling and in fact would be at odds with the Means Test as defined, none of which limit a single-person-household debtor to one vehicle expense where the debtor actually owns or leases two or more vehicles.”