[00:00:00] Speaker 02:
And we'll go to the last case on the calendar, Enrique Garcia Morales, 241384.

[00:00:06] Speaker 04:
All right, good morning.

[00:00:09] Speaker 04:
May it please the court.

[00:00:10] Speaker 04:
My name is Dave Wadsworth.

[00:00:11] Speaker 04:
I am the attorney for the appellant, Robertson Cohen, who is the Chapter 7 trustee in the underlying case.

[00:00:19] Speaker 04:
A very narrow question on appeal, really, what the phrase attributed to means in the Colorado

[00:00:26] Speaker 04:
exemption statute that exempts portions of tax-free funds.

[00:00:31] Speaker 04:
As the lower courts have both observed, that phrase is not defined in the statute.

[00:00:37] Speaker 04:
And so the bankruptcy court really looked to three different sources for coming up with her conclusion as to why the

[00:00:51] Speaker 04:
additional child tax credit is effectively entirely exempt.

[00:00:54] Speaker 04:
She looked to the dictionary definition, she looked to a Kansas case, the Roy case, and she looked to Supreme Court case, the Bostock case from a few years ago.

[00:01:07] Speaker 04:
I think those are really the three sources that she relied on.

[00:01:10] Speaker 04:
Our position would be that none of those three really are dispositive or even really helpful on the ultimate issue before the court.

[00:01:18] Speaker 04:
The dictionary definition that she quoted says, quote, to explain that attributed, I'm sorry, attribute, the definition of attribute is, quote, to explain as caused or brought about by.

[00:01:28] Speaker 04:
That's it.

[00:01:29] Speaker 04:
It doesn't say anything about what attribute means if you've got multiple causes or independent causes.

[00:01:36] Speaker 04:
So I think it's a starting point, perhaps, but it doesn't really add much to the analysis.

[00:01:43] Speaker 04:
The Roy case, the second thing that she relied on, there are

[00:01:48] Speaker 04:
I think a number of problems with that one.

[00:01:49] Speaker 04:
The first is that it's a Kansas statute that is entirely different than the Colorado statute.

[00:01:54] Speaker 04:
It doesn't include the language attributed to.

[00:01:57] Speaker 04:
That's the first problem.

[00:01:59] Speaker 04:
The second problem is that by its plain terms, that statute exempts the entire refund.

[00:02:05] Speaker 04:
And it's our position that because the Colorado legislature included the attributed to language, it doesn't exempt the entire refund.

[00:02:13] Speaker 04:
And then the final problem is a policy reason.

[00:02:15] Speaker 04:
And I think it's especially important because

[00:02:19] Speaker 04:
Judge Tyson, the bankruptcy court, quotes the policy when she launches into her analysis of why she concludes that the tax credit is exempt.

[00:02:29] Speaker 04:
The policy reason is the Roy Court says an exempt tax refund shouldn't be burdened by tax obligations.

[00:02:39] Speaker 04:
And that's just wrong because the IRS, the form itself, the IRS, the Internal Revenue

[00:02:45] Speaker 04:
burdens the child tax credit with the tax obligation, right?

[00:02:49] Speaker 04:
I mean, the math, the equation that you do under 26 USC 6401 and 6402 is you look at the tax obligation, the tax liability for the year, and then you reduce or then you apply whatever components there are under the line to decide what the tax liability is.

[00:03:09] Speaker 04:
And it's agnostic.

[00:03:10] Speaker 04:
You apply tax withholding.

[00:03:11] Speaker 04:
You apply the earned income tax credit.

[00:03:14] Speaker 04:
You apply the child tax credit.

[00:03:15] Speaker 04:
But there's no question, and even in this case, there's no question, because the actual refund was less than the child tax credit, that the credit was burdened by tax liability.

[00:03:27] Speaker 04:
So I think that the premise, the idea that the tax credit shouldn't be burdened by the liability is just an incorrect statement of the law.

[00:03:35] Speaker 04:
So Roy really isn't helpful.

[00:03:38] Speaker 04:
And let me get to BossDoc.

[00:03:39] Speaker 04:
And I think BossDoc is a little more nuanced, but I think even that case doesn't really support the outcome.

[00:03:46] Speaker 04:
Judge Tyson cites that case, Justice Gorsuch's language in there about a but-for test.

[00:03:56] Speaker 04:
And really, Judge Tyson in the bankruptcy court says that her reading of the definition of attributed to really is a but-for test.

[00:04:03] Speaker 04:
And then Justice Gorsuch says, well, the but-for test directs us to change one thing at a time and see if the outcome changes.

[00:04:10] Speaker 04:
If it does, we have found a but-for cause.

[00:04:12] Speaker 04:
And so then what Judge Tyson does is she says, well, if I take out the exempt

[00:04:15] Speaker 04:
tax credit, then there's no refund, so it's a but for cause.

[00:04:20] Speaker 04:
The problem with that is that it's an incomplete analysis.

[00:04:22] Speaker 04:
If you take out the wage withholding, there's also not a tax refund.

[00:04:26] Speaker 04:
There are independent causes to this refund, and so to focus only on one is to not look at the entire, all of the facts, all of the circumstances.

[00:04:39] Speaker 02:
Can I probe that a little bit?

[00:04:40] Speaker 02:
Sure.

[00:04:41] Speaker 02:
So why does that help your argument?

[00:04:43] Speaker 02:
There could be multiple causes.

[00:04:45] Speaker 02:
There could be multiple but for causes.

[00:04:48] Speaker 02:
But why would that cast doubt on the court's interpretation that attributed does still envision a but for relationship?

[00:05:05] Speaker 04:
Sure, I understand that.

[00:05:06] Speaker 02:
Well, so let me ask it a different way.

[00:05:09] Speaker 02:
Maybe the question doesn't make any sense.

[00:05:11] Speaker 02:
There could be multiple but for causes, Justice Scorsese says, right?

[00:05:16] Speaker 02:
Right.

[00:05:19] Speaker 02:
Okay.

[00:05:20] Speaker 02:
So when the statute says attributed, okay, that's fine.

[00:05:26] Speaker 02:
There could be multiple but for causes.

[00:05:28] Speaker 02:
But we're not talking about wage withholding.

[00:05:32] Speaker 02:
You know, we're talking about the earned tax credit or a child tax credit.

[00:05:39] Speaker 02:
And so those are either a but for cause of the refund or they're not.

[00:05:46] Speaker 02:
Even if difference in wage withholding also could have been a but for cause of the refund.

[00:05:54] Speaker 04:
I guess I'm looking at it in the reverse way, which is that if you take out the wage withholding, there's no refund.

[00:06:00] Speaker 02:
Right.

[00:06:00] Speaker 04:
And so if that's the attribution you give, then how can you say that the tax credit is a cause of the refund?

[00:06:06] Speaker 04:
There's no refund.

[00:06:07] Speaker 00:
Yeah, but here, Judge Bacharach is observing there could be multiple but-for causes, but we don't have to speculate as to the value of each.

[00:06:16] Speaker 00:
It's a tax refund.

[00:06:17] Speaker 00:
It actually sets them out by line number.

[00:06:20] Speaker 00:
So it makes it very obvious how this but-for causes apply, right?

[00:06:25] Speaker 04:
Well, no, I would say that's exactly the issue.

[00:06:27] Speaker 04:
And the tax code is also agnostic on this.

[00:06:29] Speaker 04:
It doesn't say we apply the tax credit first to tax liability or we apply it to wage withholding.

[00:06:35] Speaker 04:
We just deduct

[00:06:36] Speaker 04:
you know, en masse, what's below the line, and then we come up with what the liability is here, because you could easily say that the refund was not caused by the credit.

[00:06:52] Speaker 04:
It just seems like it is logically inconsistent to then say it is caused by the credit.

[00:06:56] Speaker 04:
It is not necessarily a but for a cause.

[00:07:00] Speaker 04:
There are other causes that would negate the refund or the credit as being a cause of the refund.

[00:07:07] Speaker 00:
But if we're looking at the words of the statute here, isn't there something to be said to say, oh, in a plain reading, it's pretty simple to just do a simple addition and subtraction.

[00:07:18] Speaker 00:
And that's the way it was intended.

[00:07:19] Speaker 00:
That seems obvious.

[00:07:20] Speaker 00:
That's how it's intended, rather than what's this pro rata formula that has several contortions to it, just to get to the formula through the words of the statute itself, let alone to apply the formula.

[00:07:31] Speaker 00:
So now you're proposing a rule that is going to require experts

[00:07:36] Speaker 00:
to come in later to take a look at these refunds and do this contortion exercise through a pro rata formula?

[00:07:44] Speaker 00:
How can we conclude that that is the best fair reading of this statute?

[00:07:52] Speaker 04:
So I have at least three responses to that, Your Honor.

[00:07:55] Speaker 04:
The first is the Borbent case that this court decided about 13 years ago, where the court literally... I mean, that opinion, and we block quoted in the brief,

[00:08:05] Speaker 04:
That opinion, the 10th Circuit, outlines what the lower court had done there in deciding that the above the line, in that case it was a different kind of credit, was exempt.

[00:08:18] Speaker 04:
And what the 10th Circuit did was it summarized the analysis.

[00:08:21] Speaker 04:
And that summary really was the but-for test.

[00:08:24] Speaker 04:
It literally was, if we take this out, then there's not this, and so on.

[00:08:27] Speaker 04:
So the test circuit summarizes that test, and then it says, this is what the BAP did.

[00:08:32] Speaker 04:
We disagree.

[00:08:34] Speaker 04:
We disagree with that methodology.

[00:08:35] Speaker 04:
And then they go in to talk about all the components to a refund and say, no one component.

[00:08:41] Speaker 04:
It's not attributed any more to one component than any other.

[00:08:43] Speaker 04:
And so I think that case stands for this idea that you do need to do a pro rata analysis.

[00:08:50] Speaker 04:
The second argument, Your Honor, would be that, and this is, I don't think, really

[00:08:56] Speaker 04:
amplified enough in the briefing, but I think it's an important argument here.

[00:09:00] Speaker 04:
And I think it also addresses a little bit Judge Tyson's marshaling comment.

[00:09:04] Speaker 04:
There's no dispute that wage withholding is not exempt, right?

[00:09:08] Speaker 04:
That's not exempt property to the estate.

[00:09:10] Speaker 04:
It's only what we can attribute to the credits that is exempt.

[00:09:14] Speaker 04:
And if you follow the methodology that the bankruptcy court followed, you are necessarily increasing, or you're doing your own math equation where you're increasing what is exempt

[00:09:26] Speaker 04:
and reducing what is non-exempt.

[00:09:28] Speaker 04:
And the statute doesn't say that.

[00:09:29] Speaker 04:
The legislature didn't say to the exclusion of or to reduce other.

[00:09:34] Speaker 04:
I mean, it's you attribute the component parts.

[00:09:37] Speaker 04:
And so it just seems to me that if the legislature really wanted to reduce what was non-exempt, it would have said so.

[00:09:43] Speaker 04:
So that's argument two.

[00:09:44] Speaker 04:
Argument three would be just kind of as it tails on to that, which is that, I mean, the legislature chose to use the words attributed to.

[00:09:50] Speaker 04:
It didn't have to.

[00:09:51] Speaker 04:
It could have just said, the child's hashrat is exempt, end of story.

[00:09:54] Speaker 04:
But it didn't.

[00:09:54] Speaker 04:
It said attributed to.

[00:09:56] Speaker 04:
that phrase any meaning, then it would seem to me that the pro rata approach, which Borgman, you know, implicitly or even explicitly, I guess it's not the holding of that case.

[00:10:09] Speaker 04:
So it's not necessarily.

[00:10:10] Speaker 00:
Isn't Borgman distinguishable from this scenario though, in a meaningful way about the fundability of the credit?

[00:10:17] Speaker 04:
I don't think so because that case dealt with, I mean, that's why it wasn't the holding of the case, what I'm relying on.

[00:10:25] Speaker 04:
The holding of that case was,

[00:10:27] Speaker 04:
the above the line non-refundable tax credit is not exempt.

[00:10:30] Speaker 04:
That's not an issue in this case.

[00:10:33] Speaker 04:
I'm relying on that case for the lengthy discussion of what the attributes of a tax refund are.

[00:10:40] Speaker 04:
And I think the other argument why Borgman is compelling here, or should be followed, is that case was decided in 2012, 2013.

[00:10:51] Speaker 04:
And the 10th Circuit went through this analysis of how you attribute the components of a refund

[00:10:57] Speaker 04:
The statute that we're talking about today was amended, I think, one time post Borgman before this case.

[00:11:05] Speaker 04:
And it's been amended a second time since this case was filed.

[00:11:09] Speaker 04:
The Colorado legislature has not taken out the attributed to language in either one of those subsequent amendments.

[00:11:14] Speaker 04:
So if the legislature didn't agree with what the 10th Circuit announced in Borgman, it could have amended the statute and it didn't.

[00:11:21] Speaker 04:
So I have another example of why the Borgman analysis is what is appropriate here.

[00:11:29] Speaker 04:
I think I've covered most of my points in a lot of those arguments.

[00:11:39] Speaker 04:
I would say the only other, the last point I want to make, and I will reserve a little bit of time, is that the, sorry.

[00:11:55] Speaker 04:
Judge Federico, you talked about expert witnesses and a complicated analysis.

[00:12:00] Speaker 04:
I think Judge Tyson actually, in her opinion, outlines how easy the analysis is.

[00:12:06] Speaker 04:
I think even in Borgman, there might be... I mean, it's really... And we tried to do that in the final section of our opening brief, is we actually... We cut and pasted a picture of the tax return and said, there's six components under the line that could be attributes of a refund.

[00:12:19] Speaker 04:
All you gotta do is add them up.

[00:12:21] Speaker 04:
And then, I mean, it's a very simple equation that you can come up with what the percentage, if the refund is $1,000, you can easily come up with what percentage each attribute has, and then that gets you to your number.

[00:12:34] Speaker 04:
And I would say that this is the final point I wanted to make, which is that the reason the pro rata solution or the pro rata answer is the right one here is because it's the only way to apply the statute without

[00:12:48] Speaker 04:
compromising the non-exempt portion of the refund to the benefit of the exempt portion.

[00:12:58] Speaker 04:
If you don't do it pro rata, as I argued a few minutes ago, you're necessarily taking away what everyone agrees is non-exempt to create something that is exempt.

[00:13:08] Speaker 04:
It seems to me if the legislature wants to do that, it needs to say that.

[00:13:11] Speaker 04:
That's also why this is distinguishable from marshaling.

[00:13:14] Speaker 04:
Because Marceline, you're talking about two different funds or multiple funds where something is exempt, something's not exempt.

[00:13:19] Speaker 04:
Here you've got one fund.

[00:13:21] Speaker 04:
And you have to decide what is exempt and what isn't exempt.

[00:13:24] Speaker 04:
And the only way to do that in a way that doesn't prejudice either side is to do a prorab.

[00:13:31] Speaker 04:
So I'll reserve the rest.

[00:13:32] Speaker 04:
Thank you, Your Honors.

[00:13:36] Speaker 03:
Good morning.

[00:13:36] Speaker 03:
Good afternoon.

[00:13:37] Speaker 03:
May it please the court, my name is Stephen Hyde Swift.

[00:13:41] Speaker 03:
And I'm the attorney for the appellee in this case.

[00:13:43] Speaker 03:
Jose Garcia Morales.

[00:13:46] Speaker 03:
We ask the court to affirm the decisions of the Bankruptcy Court and of the Federal District Court.

[00:13:51] Speaker 03:
Both these forums have ruled in favor of the appellee and agree with our position.

[00:13:57] Speaker 03:
Although there's not a large amount of money at issue, $1455, this case is important both to the trustee and to the debtor.

[00:14:06] Speaker 03:
Both the appellant in this case and his counsel are

[00:14:12] Speaker 03:
panel trustees, and their offices are paid in part by the commissions that they earn from the monies that come into their office.

[00:14:22] Speaker 03:
The debtor uses his tax-free funds as part of the process of rebuilding his financial foundation.

[00:14:27] Speaker 03:
The child tax credit is a form of public assistance, which is set aside to parents with children and to families.

[00:14:34] Speaker 03:
It's important because it assists the debtor to have funds which mitigate in part the expense of having children

[00:14:40] Speaker 03:
and the impact upon the debtor of inflation.

[00:14:44] Speaker 03:
What is the child tax credit?

[00:14:45] Speaker 03:
It's a form of public assistance, as I said, and it serves two purposes.

[00:14:50] Speaker 03:
Above the line, the non-refundable portion is applied to what the debtor owes, and it increases the amount of the ultimate tax refund.

[00:15:00] Speaker 03:
And below the line, it reduces the debtor's... The refundable portion not only reduces what the debtor owes,

[00:15:09] Speaker 03:
but potentially gives him what we had in this case, which was the debtor would have owed $345, but for the child tax credit.

[00:15:23] Speaker 03:
And so what was left over, what would have been left over without this credit would have been a tax liability rather than a tax refund.

[00:15:32] Speaker 03:
In many jurisdictions, trustees are encouraged to not administer cases under a $3,500 threshold.

[00:15:39] Speaker 03:
And Colorado trustees are encouraged to administer even smaller states.

[00:15:42] Speaker 03:
Since 2012, the Colorado legislature has rewritten the statute in question, and we believe this was done to clarify the intent of the legislature that the funds for the child tax credit be set aside to the debtor and his family.

[00:15:55] Speaker 03:
In 2022, the General Assembly changed the language of the statute to protect even the non-refundable portion.

[00:16:04] Speaker 03:
Judge Bremer notes this in at least two footnotes in his case.

[00:16:09] Speaker 03:
Footnote number two found on page two and footnote number seven on page 17.

[00:16:14] Speaker 03:
He even asked the question, has Borgman been overruled?

[00:16:21] Speaker 03:
We believe that the court should affirm the bankruptcy court for the following reasons.

[00:16:25] Speaker 03:
First, the language is not ambiguous.

[00:16:28] Speaker 03:
Borgman says this, so going all the way back to 2012, there's a ruling that the statute itself is not ambiguous.

[00:16:37] Speaker 03:
Where a statute is not ambiguous, you give it its common, ordinary meaning.

[00:16:41] Speaker 03:
Both courts have looked to the dictionary definition of the term attributable and the term full amount.

[00:16:50] Speaker 03:
This is consistent with the Supreme Court's decision in U.S.

[00:16:56] Speaker 03:
versus Ron Pehr enterprises.

[00:16:57] Speaker 02:
I don't want to interrupt your train of thought, but how do you respond to the appellant's argument that under Borgman, that cuts in against you because the wage withholding, the refund is equally attributable, say, to the amount that is withheld in wages.

[00:17:20] Speaker 02:
and the other line items.

[00:17:23] Speaker 03:
It's a good question.

[00:17:24] Speaker 03:
And from our point of view, if you look at the statute itself, it doesn't suggest that proration is what is in order.

[00:17:38] Speaker 03:
And I think in most cases, simplicity is the friend of the debtor.

[00:17:43] Speaker 03:
It is the friend of the court.

[00:17:47] Speaker 03:
both the bankruptcy court and the district court asked was, what would be the impact without your taking into account the child tax credit?

[00:17:57] Speaker 03:
And the difference is where they found that it was exempt in this case.

[00:18:05] Speaker 03:
I think the General Assembly could say that every tax refund

[00:18:12] Speaker 03:
is exempt.

[00:18:14] Speaker 03:
And so the question that we have in this case is, how can we get to the bottom of what the legislature truly intended?

[00:18:20] Speaker 03:
What do they mean by full amount?

[00:18:22] Speaker 03:
And I think Judge Tyson addresses that in a wonderful way by saying that we're taking public assistance and we're detracting from that public assistance because we're applying part of the tax liability.

[00:18:36] Speaker 03:
And I think that what the legislature intended in this case is that you deduct

[00:18:41] Speaker 03:
what was withheld in the first instance, what was taken out of my paycheck, week to week, month to month.

[00:18:48] Speaker 03:
And that amount was set aside to pay my taxes.

[00:18:56] Speaker 03:
And this child tax credit, these public assistance is given to me to give me a step up if I have children and if I'm impacted by inflation.

[00:19:06] Speaker 03:
And what these credits do,

[00:19:09] Speaker 03:
is they give the debtor a pool of money at some time during the year when his tax return is filed to begin the rebuilding process.

[00:19:21] Speaker 00:
Council, can I ask, both sides agree that our review of this Colorado statute is under a de novo review, but yet there's also a Colorado law that says that these exemption statutes are to be liberally construed in favor of the debtor.

[00:19:38] Speaker 00:
So how do we overlay that with just a straight de novo review?

[00:19:43] Speaker 03:
Well, I think that if there's a benefit of the doubt, you give it to the debtor.

[00:19:49] Speaker 03:
I think the Colorado legislature says very specifically, and we put this in our brief, that the General Assembly is to enact laws which are to be literally construed.

[00:20:01] Speaker 03:
And the whole purpose is to give something to the debtor with which to rebuild his finances.

[00:20:09] Speaker 03:
And that's very important.

[00:20:11] Speaker 03:
And it's very important because it gives the debtor something with which to start over.

[00:20:17] Speaker 03:
And it serves a useful purpose with respect to the state, because the debtor's not drawing upon the resources of the state if he's self-sufficient.

[00:20:29] Speaker 03:
And so it serves two useful purposes.

[00:20:34] Speaker 02:
I don't want to interrupt your train of thought.

[00:20:36] Speaker 02:
I want to go back to what you were saying earlier about Borgman and attributed.

[00:20:42] Speaker 02:
And I want to ask you, and you may not have Judge Abel's language there, but your adversary was referring to this passage.

[00:20:54] Speaker 02:
It is true that the nonrefundable portion of the child tax credit is part of the equation by which a refund, if any, is calculated.

[00:21:03] Speaker 02:
But so too are the amount of income earned, the amount of deductions claimed, the amount of credits available, and the amount of taxes already paid in withholding among other variables.

[00:21:15] Speaker 02:
A taxpayer's refund, if any, is no more attributed to the non-refundable portion of the child tax credit than it is to any of these other elements of the equation.

[00:21:25] Speaker 02:
So how do you respond to the appellant's argument that Judge Avell

[00:21:32] Speaker 02:
has rejected what the district court did in interpreting this attributed to as being binary.

[00:21:42] Speaker 03:
I think we need to look at what the General Assembly has done since 2012.

[00:21:46] Speaker 03:
And one of the things that they have done is they have incorporated into the statute an exemption for the non-reformable portion of the child tax credit.

[00:21:59] Speaker 03:
It's possible that Borgman may have been overruled.

[00:22:02] Speaker 00:
Yeah, but that didn't happen until after.

[00:22:03] Speaker 00:
That's true.

[00:22:05] Speaker 00:
So that has really no applicability to Borgman.

[00:22:06] Speaker 03:
But it does give us some insight into what the legislature was intending.

[00:22:10] Speaker 00:
And that's where... But how?

[00:22:13] Speaker 00:
If they don't make that change until after this dispute has arisen, it may be illustrative of their intent when they made the amendment in 2023, but not when this dispute arose in... My experience with General Assembly is that they're slow.

[00:22:28] Speaker 03:
to see the error of your ways.

[00:22:31] Speaker 03:
And I can tell you that I personally talked to a state senator, and when I told them what had happened in the Borgman case, he was astounded that it could be given that interpretation.

[00:22:45] Speaker 01:
Now, they may read your argument here, so be careful.

[00:22:53] Speaker 01:
I've just to go ahead.

[00:22:55] Speaker 03:
But to continue.

[00:22:57] Speaker 03:
I don't think we can't, you know, avoid taking note of the language that's been employed.

[00:23:04] Speaker 03:
The statute specifically exempts the full amount and the amount attributable to the child tax credit.

[00:23:10] Speaker 03:
And, frankly, the trustee's proposal for tracing cannot be squared or read consistently with the term full amount.

[00:23:19] Speaker 03:
You know, I think one of the things that we have to do is read the statute consistent with itself.

[00:23:26] Speaker 03:
And the logical conclusion is that the trustee's methodology significantly eats away a portion of the child tax credit, which, as I said, is public assistance.

[00:23:34] Speaker 03:
This cannot be read consistent with the language to give the debtor the benefit of the full amount.

[00:23:40] Speaker 03:
What does full amount mean?

[00:23:42] Speaker 03:
I think it means every benefit.

[00:23:45] Speaker 03:
And that's why I mentioned I think the General Assembly could say, well, we're going to let you keep every tax...

[00:23:51] Speaker 02:
It's certainly qualified by this prepositional clause of any federal or state income tax refund.

[00:23:59] Speaker 02:
So if the Colorado legislature had taken out the word full, would you be arguing that the meaning is any different?

[00:24:06] Speaker 02:
I doubt it.

[00:24:07] Speaker 02:
They would be entitled to 100%.

[00:24:10] Speaker 03:
Well, I don't think that language is superfluous.

[00:24:12] Speaker 03:
I think it was to give him emphasis that we want you to keep every aspect of the child tax credit.

[00:24:20] Speaker 02:
That may be.

[00:24:20] Speaker 02:
I mean, if we were to consult the legislators, but if we're just reading the language, I don't know how the word full necessarily cuts either way.

[00:24:34] Speaker 02:
Because if you take it out, it does seem like it would be superfluous.

[00:24:41] Speaker 03:
Perhaps, but we then fall back on policy.

[00:24:50] Speaker 03:
Policy is important.

[00:24:51] Speaker 02:
OK, let me play devil's advocate here.

[00:24:54] Speaker 02:
You started your argument by saying that it's unambiguous.

[00:24:57] Speaker 02:
If it's unambiguous, we just look at the words.

[00:25:00] Speaker 02:
I don't know that we look at policy or canons about liberally interpreting the exemption.

[00:25:08] Speaker 02:
So, I mean, we may say, both of you may say it's unambiguous, and we may say, I think Cortez says, you know, we may say it's ambiguous, even if you're, you know, both of you disagree with that.

[00:25:20] Speaker 02:
But if you're right that it's unambiguous, we can't look at policy interests, can we?

[00:25:27] Speaker 02:
Because that's only if it's ambiguous.

[00:25:29] Speaker 03:
Or am I wrong about that?

[00:25:37] Speaker 03:
I think that the legislature has given us clues as to what they mean.

[00:25:45] Speaker 03:
And I think that the most direct way of interpreting this statute is by giving it a plain, ordinary meaning and by looking at it in terms of how does this best benefit the debtor?

[00:25:59] Speaker 03:
And I think there's two policies afoot here.

[00:26:03] Speaker 03:
One is the policy to pay the trustees

[00:26:06] Speaker 03:
you know, 25% of the money that the commissions that they receive that they operate their offices from, offices from, law firms.

[00:26:15] Speaker 03:
The other policy is the policy of benefiting the debtor and giving him something in which to fall back.

[00:26:20] Speaker 03:
And I think in the balance, we do what we can to benefit the debtor.

[00:26:27] Speaker 03:
And I think the interpretation that we've given to this statute is superior because it's simple and it's easy to apply.

[00:26:36] Speaker 03:
And I think that both Bostock's decision and Judge Tyson relied upon

[00:26:43] Speaker 03:
was a good analysis of how this should be decided.

[00:26:48] Speaker 03:
And I think, you know, one of the dangers that you have interpreting a statute is, you know, the trustee comes to us and he says, we get to keep the tax refund and we get to keep it because we want you to adopt this difficult or more complex analysis of how it's calculated.

[00:27:08] Speaker 03:
And so from our standpoint, one of the things that makes this decision, I think, less complicated is it's a lot less complex.

[00:27:22] Speaker 03:
It's a lot less subject to misinterpretation.

[00:27:26] Speaker 03:
It's not inclined to take away from the debtor that which the legislature intended that he have.

[00:27:33] Speaker 03:
And I realize that it is the responsibility of the court to try to interpret what that means.

[00:27:41] Speaker 03:
But from our point of view, what we think it means is give the debtor every benefit of the child tax credit.

[00:27:49] Speaker 03:
And from my point of view, the notion that the above-the-line non-refundable portion doesn't impact the tax refund is not correct.

[00:28:00] Speaker 03:
And I think that's where the legislature has taken us.

[00:28:03] Speaker 03:
And I think what they want us to do is use these funds in a responsible way.

[00:28:13] Speaker 03:
I think one of the most powerful arguments that Judge Tyson made

[00:28:19] Speaker 03:
was the notion that, in its effect, the analysis, the proration scheme that the trustee has come up with, in large part, it detracts from or destroys a large percentage of the public assistance.

[00:28:40] Speaker 03:
And we ask the court to not go down that road.

[00:28:43] Speaker 03:
We think it's a rabbit hole.

[00:28:44] Speaker 03:
Thank you very much.

[00:28:45] Speaker 04:
Thank you.

[00:28:47] Speaker 04:
Thank you, Your Honor.

[00:28:48] Speaker 04:
Just a couple follow-up points.

[00:28:52] Speaker 04:
You asked Mr. Swift, as you also asked me about the amendments post-Borgman.

[00:28:56] Speaker 04:
I think the best way to look at the amendment is it just added another component into the mix.

[00:29:01] Speaker 04:
I mean, it just said, in addition to the below-the-line credits, we're also going to throw in the above-the-line.

[00:29:04] Speaker 04:
That's the only change.

[00:29:06] Speaker 04:
As I said before, it didn't have anything to do with the attributed to language.

[00:29:10] Speaker 04:
And then in response to your question to Mr. Swift, if you didn't ask me about the liberal construction, I just thought it was worth saying something about that.

[00:29:18] Speaker 04:
This court has ruled previously that that mandate is still limited by the words of the statute.

[00:29:28] Speaker 04:
That's the Gordon case that we cite in the brief.

[00:29:33] Speaker 04:
I mean, we're not arguing that you don't exempt the child tax credit.

[00:29:37] Speaker 04:
All we're arguing is that to apply the statute as written, to apply it in a way that doesn't elevate something that is exempt at the expense of something that is not exempt, which the legislature doesn't say we're supposed to be doing,

[00:29:50] Speaker 04:
The pro rata approach makes the most sense.

[00:29:52] Speaker 04:
You're still getting your pro rata share of the child tax credit as an exemption.

[00:29:57] Speaker 04:
So I think we're still construing the statute in a way that provides the benefits that it was intended to confer.

[00:30:06] Speaker 04:
And I agree with Judge Baccarock about the policy.

[00:30:09] Speaker 04:
Everyone's argued this is unambiguous.

[00:30:11] Speaker 04:
We're not looking to the policy considerations.

[00:30:15] Speaker 04:
But I would say the facts of this case, you look at the facts of this case, Mr. Garcia Morales made $100,000 the year that he had this tax refund.

[00:30:21] Speaker 04:
He wasn't destitute, as Amicus argued and Mr. Swift argued.

[00:30:25] Speaker 04:
This guy was solidly middle class.

[00:30:27] Speaker 04:
So this is not necessarily the case where you're talking about somebody who will be left penniless if he has to turn over another $400 of this refund to pay his creditors.

[00:30:39] Speaker 04:
Thank you.

[00:30:40] Speaker 04:
Any other questions?

[00:30:44] Speaker 02:
All right, thank you very much.

[00:30:46] Speaker 02:
It's very well presented by both sides.

[00:30:48] Speaker 02:
We appreciate your excellent advocacy.

[00:30:51] Speaker 02:
Court is in recess until 9 o'clock tomorrow morning.