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AG Schmidt: Kansas’ Earned Income Tax Credit Exemption upheld by federal judge

Release Date: Apr 06, 2012

TOPEKA – (April 6, 2012) – A federal bankruptcy court this week upheld the constitutionality of Kansas’ Earned Income Tax Credit Exemption for low-income wage earners filing for bankruptcy, Kansas Attorney General Derek Schmidt said today.

The Kansas Earned Income Tax Credit Exemption is the result of legislation passed by the 2011 Kansas Legislature allowing a debtor in bankruptcy to exempt or keep a portion of one year’s tax refund attributable to the payment of social security taxes deducted from their wages. A Chapter 7 bankruptcy trustee challenged the constitutionality of the exemption, claiming it conflicted with federal law and with the United States Constitution requiring uniformity in bankruptcy laws.

The attorney general’s office intervened in more than 150 bankruptcy cases in Topeka and Wichita and asked the courts to uphold the state exemption statute. Judge Janice Miller Karlin’s decision to uphold the debtor’s right to claim the earned income exemption addresses bankruptcies filed in Topeka. Challenges are still pending in more than 90 bankruptcy cases filed in Wichita.

Assistant Attorney General Derenda Mitchell from Schmidt’s office litigated the case.

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News releases issued prior to 2011 are available through an archive hosted by the Kansas State Library.