As if the means test wasn’t illogical and opaque enough, consider the unwritten provision for old cars.
Where do you find the unwritten allowance? It’s not in the Bankruptcy Code but in the Internal Revenue Manual at 18.104.22.168. The IRS allows a delinquent taxpayer with a paid for car more than 6 years old or with more than 75,000 miles to deduct an extra $200 for the expense of operating an older or high mileage vehicle. And so, it appears, do bankruptcy judges.
Now, there is a whole other discussion about how or why the IRS’s manual for its collection agents should be grafted onto the Bankruptcy Code. And if this aspect of the IRS’s application of its standards is incorporated into the means test, what other provisions might be next? Dollars to doughnuts, it won’t be one that sorta benefits those foolish enough to have a paid for car.
Anyway, my thanks to attorney Roxanne Daneri of Sacramento who shared the online location of this provision with me. Several times in the past years, I had gone looking for the URL for this provision without success. The UST has long offered the “clunker allowance” as a sop for their position that with no debt on a car, the debtor didn’t get an ownership allowance. That position has since, of course, been cemented by the Supreme Court in Ransom.
So, add to your client interview checklist the mileage on the client’s vehicles. Perhaps the client needs to drive the car around the block a couple of times to make that 75,000 mile point. Or wait to file to til the new model year. That mileage or sheer age may eat up another $200 of CMI. Then, join me in wondering if the means test doesn’t reward the wrong kind of debtor behavior?
Image courtesy of Bogdan Sunitu.