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household size and median income (IRS v. Census Bureau)

In re Ellringer, 2007 WL 1976750 (Bkrtcy.D. Minn. 2007) (Robert J. Kressel, J.)

Chapter 7 debtor was married and lived with a 3rd person who was not a dependent. That person regularly contributed $600 to the household budget, most of which was used to pay for their own living expenses. Debtor compared their income to a household of 1, which resulted in an above-median income. Debtor excluded the $600 contributed by the 3rd person. Trustee argued that the 3rd person should not be included in the household count OR if counted then the $600 should be included in the debtor”s income. The UST advocated using the definition of “household” found in the Internal Revenue Manuel. Trouble was that the IRM does not actually define the term household and instead simply indicates that the number of persons allowed under the national standard expenses should generally be the same as the number of dependents on the taxpayer”s latest income tax return. See IRM § (2004). Court rejected this argument and held that

“The Census Bureau defines “household” as “all of the people, related and unrelated, who occupy a housing unit.” U.S. Census Bureau, Current Population Survey (2004). A housing unit is a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters. Id. Households may be either family or nonfamily. Id. Family households include the householder and all the other people in the living quarters who are related to the householder by birth, marriage, or adoption. Id. A nonfamily household consists of a householder living alone, or a householder who shares the home exclusively with people to whom he or she is not related. Id. If Congress had intended to limit household size to only household members related by blood, marriage or adoption, it could have done so by saying “in the case of a debtor in a family of 2 . . . .”

The Court further held that the Code only requires to be included in the median income and means tests that portion of a non-filing household member”s income that is regularly contributed to the ” … household expenses of the debtor or the debtor”s dependents.” See §101(10A).

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