The State of Minnesota does offer a property tax refund. The Tax Refund Act provides three types of refunds: (1) a refund for homeowners whose property taxes are above a certain percentage of their household income, Minn. Stat. § 290A.04, subd. 2 ; (2) a refund for renters whose rent constituting property taxes exceeds a certain percentage of their household income, and (3) a refund for homeowners whose property taxes increased substantially.
But, for Chapter 7 bankruptcy filers, it should be noted the court has concluded the property tax refund or renter’s rebate is not exempted by Minn. Stat. § 550.37. Subdivision 14.
Minnesota law lists types of property that a bankruptcy debtor may claim as exempt. Under Minn. Stat. § 550.37. Subdivision 14 of Minnesota Statute § 550.37 exempts "[a]ll government assistance based on need" and provides, in relevant part:
All government assistance based on need and the earnings or salary of a person who receives government assistance based on need shall be exempt from all claims of creditors, including any contractual setoff or security interest asserted by a financial institution.
The court has determined the Minnesota property tax refund is not exempt from the bankruptcy estate as a "government assistance based on need" under Minnesota law.
The court found the text of the Property Tax Refund Act is a strong indication that the refund is not government assistance based on need. The Act states that its "purpose ... is to provide property tax relief to certain persons who own or rent their homesteads." Minn. Stat. § 290A.02 The court noted the Act does not state that its purpose is to provide property tax relief to needy individuals, such as those who are low-income, disabled, unemployed, or elderly. The court has found the Minnesota Legislature did not intend for the property tax refund to be based on need, and therefore, there is no exemption to protect a property tax refund in a Minnesota bankruptcy filing.
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With no exemption to protect a property tax refund, Minnesota bankruptcy filers must be primed that their property tax refund will become the property of the bankruptcy estate. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.
