Jennifer Lee Hernandez

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re:
Jennifer Lee Hernandez,
Debtor.
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Case No. 26-30232
Chapter 7
Judge Crist
MEMORANDUM OPINION AND ORDER SUSTAINING OBJECTION OF TRUSTEE
TO AMENDED CLAIM OF EXEMPTION IN TAX REFUND (DOC. 40)
I. 	Introduction
Before the Court is Chapter 7 Trustee Patricia Friesinger’s (the “Trustee” or “Ms.
Friesinger”) Objection of Trustee to Amended Claim of Exemption in Tax Refund Combined with
Notice Thereof (Doc. 40) (the “Objection”), which was timely filed on May 8, 2026, pursuant to
Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”) 4003(b).1 The Debtor in this chapter
7 case, Jennifer Lee Hernandez (“Ms. Hernandez” or the “Debtor”), appearing pro se, filed
Debtor’s Response to Trustee’s Objection to Amended Claim of Exemption in Tax Refund
(“Response”) on May 13, 2026 (Doc. 42). However, because the Debtor had also previously
amended her Schedule C (Doc. 41) on the same date that the Trustee filed her Objection (on May
1 An objection to a claimed exemption by a party in interest, asserted under Bankruptcy Rule 4003(b)(1), is timely if
filed “within 30 days after the later of: . . . the conclusion of the § 341 meeting of creditors; [or] . . . the filing of an
amendment to the list[.]” Fed. R. Bankr. P. 4003(b)(1). Here, as indicated below, the Debtor’s first Amended
Schedule C (Doc. 35) was filed on April 27, 2026.
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: September 29, 2026
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8, 2026) the Trustee then filed: (a) the Supplement: Objection of Trustee to Amended Claim of
Exemption in Tax Refund [Doc. 40] to Include Objection to Re-Filed Claim of Exemption [Doc.
41] (Doc. 43); and (b) a Reply in Support of Objection of Trustee to Amended Claim of Exemption
in Tax Refund Combined with Notice Thereof (Doc. 44) (the “Reply”), both on May 20, 2026. The
Debtor, without filing a motion requesting leave under Local Bankruptcy Rule 9013-1(c), filed
Debtor’s Reply to Trustee’s Response in Support of Objection to Amended Claim of Exemption
(Doc. 45) on May 27, 2026, which was a surresponse.2 On July 1, 2026, the Court entered its Order
Scheduling Hearing on Contested Matter (Docs. 40, 42, 43, 44, and 45), Requiring Filings, and
Ordering Other Matters (Doc. 52), which, amongst other things, set a hearing on the Trustee’s
Objection. At the hearing held on July 22, 2026, the Court took this matter under advisement. The
Court now issues its final ruling sustaining the Trustee’s Objection.
II. 	Background
The Debtor, acting pro se, filed for bankruptcy relief under chapter 7 of title 11 of the
United States Code (the “Bankruptcy Code”) on February 3, 2026. On her original Schedule A/B
(Doc. 1 at 17-18), Debtor disclosed a federal tax refund of $3,000.00 as owing to her, and on
Schedule C (Doc. 1 at 25) she claimed an exemption of “100% of fair market value, up to any
applicable statutory limit” pursuant to Ohio Revised Code (“R.C.”) § 2329.66(A)(9)(g).
On April 27, 2026, Ms. Hernandez filed her Amended Schedule C (Doc. 35) in which she
disclosed that she had received a 2025 federal tax refund of $10,685 postpetition. Am. Sch. C at
3.3 And she claimed an exemption of “100% of fair market value, up to any applicable statutory
limit” of the refund based upon “$4,328 – [R.C.] 2329.66(A)(9)(f) (EIC) $6357 – Remaining
portion of 2025 Federal Tax Refund, 2329.66(A)(13) and (A)(18) Specific dollar amounts ($625
+ $1,675).” Id. On May 8, 2026, the Trustee filed her Objection.4 The Trustee did not object to
2 See Scott Moïse, The Scrivener: To “Sur” With Love, SC Lawyer, Sept. 2018, at 52-54.
3 Debtor’s Amended Schedule C (Doc. 35) was originally filed on April 27, 2026, but that version was not signed. See
Notification of Deficiency (Doc. 38). Another Amended Schedule C (Doc. 41) containing Debtor’s signature dated
May 5, 2026, at the bottom of several pages and on an added Declaration About an Individual Debtor’s Schedules,
was filed on May 8, 2026, and will be referred to hereinafter.
4 The Trustee had previously timely filed an Objection to Claim of Exemptions Combined with Notice Thereof (Doc.
23) on April 3, 2026, within 30 days after the conclusion of the meeting of creditors on March 13, 2026. See Fed. R.
Bankr. P. 4003(b)(1). Debtor, pro se, filed a Response (Doc. 26) to that Objection on April 14, 2026, but on April 21,
2026, the Court granted the Trustee’s motion for an extension of time in which to reply to the Debtor’s Response
because the Trustee represented that she had received an amended Schedule C from Debtor that had not yet been filed.
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Debtor’s foregoing claimed exemption of $4,328 from her Earned Income Credit refund under
R.C. 	§ 2329.66(A)(9)(f), 	the 	general 	“wild 	card” 	exemption 	of 	$1,675.00 	under 	R.C.
§ 2329.18(A)(18), or $625.00 under Ohio’s cash-on-hand exemption under R.C. § 2329.66(A)(3),
which was not explicitly mentioned in the Debtor’s Amended Schedule C, but to which she would
be otherwise entitled. Instead, the Trustee only objected to Debtor’s claim of the wage exemption
under R.C. § 2329.66(A)(13) in the remaining amount of the 2025 federal tax refund, $4,057.00,
after all other exemptions had been claimed.
The hearing on the Objection was held on July 22, 2026. Ms. Friesinger, as counsel for the
Trustee, and the Debtor, on her own behalf, both appeared. The Trustee reiterated on the record
that the Trustee’s Objection was limited to Debtor’s claim of an exemption in her 2025 federal tax
refund under R.C. § 2329.66(A)(13), also referred to as the Ohio wage exemption, in the amount
of $4,057, and that the issue in this contested matter was one of law, not of fact. The Trustee did
not object to the Debtor’s other exemptions claimed in the $10,685 federal tax refund totaling
$6,628, which she asserted pursuant to: (a) R.C. § 2329.66(A)(9)(f), in the amount of $4,328; (b)
R.C. § 2329.66(A)(3),5 in the amount of $6256; and (c) R.C. § 2329.66(a)(18), in the amount of
$1,675. The Debtor agreed with and did not dispute the relevant facts as presented by the Trustee.
Debtor also stated that she had used the federal tax refund money for living expenses, which she
does every year given that she withholds more of her wages than needed to pay her taxes. Thus,
she considers the federal tax refund to still fit within the category of “wages” for purposes of
claiming an exemption under R.C. § 2329.66(A)(13). Debtor also stated that it would be very
difficult for her to pay the amount of money in dispute, $4,057, to the Trustee, based on her present
financial situation. The Trustee noted that the only issue currently before the Court was the
Trustee’s Objection and that she had not yet filed a motion for turnover of any non-exempt funds.
5 Debtor mistakenly identified R.C. § 2329.66(A)(13) as the basis for her claimed $625 exemption in the federal tax
return in her Amended Schedule C (Docs. 35 and 41 at page 3).
6 Pursuant to R.C. § 2329.66(B), “[o]n April 1, 2010, and on the first day of April in each third calendar year after
2010, the Ohio judicial conference shall adjust each dollar amount set forth in this section to reflect any increase in
the consumer price index for all urban consumers, as published by the United States department of labor . . . .” Further,
“[t]he Ohio judicial conference shall prepare a memorandum specifying the adjusted dollar amounts.” R.C.
§ 2329.66(B). The Ohio Judicial Conference issued the current memorandum on March 3, 2025, which applies from
April 1, 2025 through March 31, 2028.
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The parties both timely filed witness and exhibit lists, but because there was no dispute
about the facts, no testimony was taken and no exhibits were admitted into evidence, leaving only
oral argument over application of the law to the facts. The Court, however, does take judicial notice
pursuant to Federal Rule of Evidence 201(c)(1) of the Debtor’s Amended Schedule C (Doc. 41)
and the exemptions claimed by Ms. Hernandez. Beyond the cases cited by the Trustee in her
Objection, the parties did not identify any other relevant case law. Ms. Hernandez advised that she
had looked, but could not find anything else, and her filings had focused on “the factual
circumstances[.]” Resp. at 1, ¶ 3. Thus, from a legal standpoint, the Court was presented with the
following statement of law in the Trustee’s Objection:
5. It is well-settled law that the Wage Exemption does not
apply to tax refunds. The US Supreme Court has determined that the
federal exemption substantially similar to Ohio’s Wage Exemption
does not apply to tax refunds in Kokoszka v. Belford, 417 U.S. 642
(1974). This Court in In re Minton, 348 B.R. 467 (S.D. Ohio 2006)
explained that the same analysis applied by the US Supreme Court
also applies to bar the application of the Wage Exemption to the tax
refund. If the Debtor intended to apply the Wage Exemption to the
Federal Refund, it is inappropriate and should be disallowed.
Obj. at 4, ¶ 5.
At the conclusion of the hearing held on July 22, 2026, the Court tentatively indicated that,
based on legal precedent and barring the Court’s discovery of any conflicting law, the Trustee’s
Objection would be granted, but that the Court would take the matter under advisement in order to
take another look.
III. 	Jurisdiction
This Court has jurisdiction over the Trustee’s Objection pursuant to 28 U.S.C. § 1334(b)
and Amended General Order No. 05-02 (Amended Standing Order of Reference) entered by the
United States District Court for the Southern District of Ohio, pursuant to 28 U.S.C. § 157(a), on
September 16, 2016. “A dispute over claimed exemptions is a core proceeding pursuant to 28
U.S.C. § 157(b)(2)(B).” In re Sforzo, 332 B.R. 294, 295 (Bankr. N.D. Ohio 2005). And “[a] dispute
over whether property is exempt from the bankruptcy estate ‘stems from the bankruptcy itself.’ ”
In re Andrews, 605 B.R. 491, 492 (Bankr. S.D. Ohio 2019) (quoting In re Edelson, 533 B.R. 651,
653 (Bankr. N.D. Ill. 2015) (quoting Stern v. Marshall, 564 U.S. 462, 499 . . . (2011)), aff’d sub
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nom. Loventhal v. Edelson, 579 B.R. 456 (N.D. Ill. 2016), aff’d, 844 F.3d 662 (7th Cir. 2016)). Of
course, this means this Court “has the constitutional authority to enter a final order in this matter.”
Id. (citing Edelson, 533 B.R. at 653).
IV. 	Analysis
A. 	Summary
For the reasons stated below, the Court will sustain the Trustee’s Objection to Debtor’s
claim of exemption under Ohio’s wage exemption statute, R.C. § 2329.66(A)(13), in the remaining
amount of her 2025 federal tax refund, $4,057, which is not exempt through a combination of other
Ohio exemptions claimed by Ms. Hernandez totaling $6,628 – R.C. §§ 2329.66(A)(9)(f) ($4,328),
(A)(13) ($625), and (A)(18) ($1,675) – which the Trustee did not challenge. Thus, the Debtor’s
claimed exemption in $4,057 of the $10,685 federal tax refund, based on the Ohio wage exemption,
is denied such that this amount is non-exempt.
B. 	The Ohio Wage Exemption (R.C. § 2329.66(A)(13))
Filing a bankruptcy case creates an estate that “is comprised of” all the property identified
in 11 U.S.C. § 541(a)(1)-(10).7 But an individual debtor is afforded the opportunity to “exempt
from property of the estate” certain property listed in § 522(b) through claiming exemptions in
accordance with Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”) 4003(a).8 Because
“Ohio has opted out of the federal exemptions . . . the exemptions available to a debtor domiciled
in Ohio are based on Ohio law.” In re Wood, 459 B.R. 263, 266 (Bankr. S.D. Ohio 2011) (citing
11 U.S.C. § 522(b)(2); R.C. § 2329.66 (2011)); see also 11 U.S.C. § 522(b)(3)(A) (providing that
an individual debtor may exempt property that is exempt under “State or local law that is applicable
on the date of the filing of the petition . . . .”). In addition, R.C. § 2329.662 provides that
“[p]ursuant to the ‘Bankruptcy Reform Act of 1978,’ . . . 11 U.S.C. 522(b)(1), this state
specifically does not authorize debtors who are domiciled in this state to exempt the property
7 Notably, § 541, defining what is “property of the estate” under the Bankruptcy Code of 1978 is more expansive than
under § 70a(5) of the Bankruptcy Act, 11 U.S.C. § 110(a)(5) (repealed 1978). See In re Nadler, 122 B.R. 162, 168
(Bankr. D. Mass. 1990) (“In addition to including exempt property and future wage equivalents in the estate, § 541
also drops the requirement that a property interest be subject to voluntary or involuntary transfer in order to be part of
the estate.”).
8 Pursuant to Bankruptcy Rule 1009(a)(1), “[a] debtor may amend a . . . schedule . . . at any time before the case is
closed.”
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specified in the ‘Bankruptcy Reform Act of 1978,’ . . . 11 U.S.C. 522(d).” Thus, Ms. Hernandez
can claim the exemptions provided by R.C. § 2329.66.
At 	issue 	in 	this 	case 	is 	Ohio’s 	wage 	exemption, 	which 	is 	contained 	in 	R.C.
§ 2329.66(A)(13), and currently provides as follows:
(A) Every person who is domiciled in this state may hold property
exempt from execution, garnishment, attachment, or sale to satisfy
a judgment or order, as follows:
* 	* 	*
(13) Except as provided in sections 3119.80, 3119.81, 3121.02,
3121.03, and 3123.06 of the Revised Code, personal earnings of
the person owed to the person for services in an amount equal to
the greater of the following amounts:
(a) If paid weekly, thirty times the current federal minimum
hourly wage; if paid biweekly, sixty times the current federal
minimum hourly wage; if paid semimonthly, sixty-five
times the current federal minimum hourly wage; or if paid
monthly, 	one 	hundred 	thirty 	times 	the 	current 	federal
minimum hourly wage that is in effect at the time the
earnings are payable, as prescribed by the “Fair Labor
Standards Act of 1938,” 52 Stat. 1060, 29 U.S.C. 206(a)(1),
as amended;
(b) Seventy-five per cent of the disposable earnings owed to
the person.
R.C. § 2329.66(A)(13) (eff. Sept. 30, 2025).
B. 	Kokoszka v. Belford, 417 U.S. 642 (1974)
The Trustee, as the objecting party, has the burden to prove that the exemption does not
apply by a preponderance of evidence. In re Richards, 642 B.R. 777, 783 (B.A.P. 6th Cir. 2022)
(citing Fed. R. Bankr. P. 4003(c)). The Trustee’s Objection relied on the Supreme Court of the
United States’ decision in Kokoszka v. Belford, which analyzed application of the Federal
Consumer Credit Protection Act under the former Bankruptcy Act of 1898. 417 U.S. 642 (1974)
(discussed in In re Minton, 348 B.R. 467, 470-71 (Bankr. S.D. Ohio 2006) (Walter, J.)). In
Kokoszka, the first question was “whether petitioner’s income tax refund was ‘property’ within the
meaning of § 70a (5) of the Bankruptcy Act.” 417 U.S. at 645. The Supreme Court agreed with
the Court of Appeals for the Second Circuit that an income tax refund was “ ‘sufficiently rooted
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in the prebankruptcy past’ to be defined as ‘property’ under § 70a (5).” 417 U.S. at 648 (quoting
Segal v. Rochelle, 382 U.S. 375, 380 (1966)). Distinguishing an income tax refund from vacation
pay, the Supreme Court reasoned that:
The income tax refund at issue in the present case does not
relate conceptually to future wages and it is not the equivalent of
future wages for the purpose of giving the bankrupt a “fresh start.”
The 	tax 	payments 	refunded 	here 	were 	income 	tax 	payments
withheld from the petitioner prior to his filing for bankruptcy and
are based on earnings prior to that filing. Relying on Lines, however,
petitioner contends that the refund is necessary for a “fresh start”
since it is solely derived from wages. In Lines, we described wages
as “ ‘a specialized type of property presenting distinct problems in
our economic system’ ” since they provide the basic means for the
“economic survival of the debtor.” 400 U.S., at 20.
Petitioner is correct in arguing that both this tax refund and
the vacation pay in Lines share the common characteristic of being
“wage based.” It is also true, however, that only the vacation pay in
Lines was designed to function as a wage substitute at some future
period, to “support the basic requirements of life for [the debtors]
and their families . . . .” Ibid. This distinction is crucial. As the Court
of Appeals noted, since a “tax refund is not the weekly or other
periodic income required by a wage earner for his basic support, to
deprive him of it will not hinder his ability to make a fresh start
unhampered by the pressure of preexisting debt,” 479 F.2d, at 995.
“Just because some property interest had its source in wages . . .
does not give it special protection, for to do so would exempt from
the bankruptcy 	estate 	most 	of 	the property owned 	by 	many
bankrupts, such as savings accounts and automobiles which had
their origin in wages.” Ibid.
Kokoszka, 417 U.S. at 647-48 (citing and quoting Lines v. Frederick, 400 U.S. 18, 20 (1970)
(quoting Sniadach v. Family Fin. Corp., 395 U.S. 337, 340 (1969)). As a result, the Supreme Court
agreed “with the Court of Appeals that the Consumer Credit Protection Act” which, similar to the
wage exemption under R.C. § 2329.66(A)(13), limited the amount creditors could garnish from a
debtor’s wages, did not “restrict the right of the trustee to treat the income tax refund as property
of the bankrupt’s estate.” Kokoszka, 417 U.S. at 652. Thus, although a debtor might over-withhold
wages during the year to ensure they will have no future out-of-pocket tax liability, under the
reasoning of Kokoszka this approach does not overcome that fact that wages withheld prepetition
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are still “ ‘sufficiently rooted in the prebankruptcy past[.]’ ” 417 U.S. 648 (quoting Segal v.
Rochelle, 382 U.S. 375, 380 (1966)).9
Interpretations of what was non-exempt property that a trustee could administer under the
Bankruptcy Act of 1898 can inform “our understanding of the language of the [Bankruptcy] Code.”
Kelly v. Robinson, 479 U.S. 36, 44 (1986); see also United States v. Ron Pair Enters., 489 U.S.
235, 245 (1989). In Ron Pair Enterprises the Supreme Court wrote that:
In Kelly, as in Midlantic, pre-Code practice was significant because
it reflected policy considerations of great longevity and importance.
Kelly and Midlantic make clear that, in an appropriate case,
a court must determine whether Congress has expressed an intent to
change the interpretation of a judicially created concept in enacting
the Code.
489 U.S. 245 (footnote omitted). At the same time, “[t]he Bankruptcy Act of 1898 took an entirely
different approach from that of the present Code to the types of property interests includible in the
bankruptcy estate.” In re Nadler, 122 B.R. 162, 167 (Bankr. D. Mass. 1990). “In interpreting the
term ‘property’ as it appeared in § 70, the courts added a further requirement – that the property
interest not consist of future wages or their equivalent needed by the debtor for a fresh start.” Id.
(citing Local Loan Co. v. Hunt, 292 234 (1934); Lines, 400 U.S. 18; Kokoszka, 417 U.S. 642;
Segal, 382 U.S. 375). “All of these decisions were rendered in the context of a statute which left
exemptions to state law and federal nonbankruptcy law.” Id. (citing Bankruptcy Act of 1898, § 6,
11 U.S.C. § 24 (repealed 1978)). Moreover, rather than exempting property “under present § 522,”
property “never entered the estate in the first place.” Id. (citing Bankruptcy Act of 1898, § 70, 11
U.S.C. § 110 (repealed 1978); Lockwood v. Exchange Bank, 190 U.S. 294 (1903)). However, under
the Bankruptcy Code, “earnings from services performed by an individual debtor after the
commencement of the case” are excluded under 11 U.S.C. § 541(a)(6). Id.
C. 	In re Minton, 348 B.R. 467 (Bankr. S.D. Ohio 2006)
The question now before this Court regarding the application of the Ohio wage exemption
in R.C. § 2329.66(A)(13) to a tax refund was previously addressed by this Court in 2006 in Minton.
9 A practical takeaway, however, may be that Ms. Hernandez could have reduced the amount of her wages that were
turned into “taxes” that were later refunded and not protected by the wage exemption by reducing her federal income
tax withholding, though that choice comes with the converse risk of not having enough money to pay all her taxes
when due in April.
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348 B.R. at 469-72. Therein, the Court “adopt[ed] Kokoszka’s more narrow interpretation of what
funds constitute earnings and h[eld] that a tax refund does not qualify as ‘personal earnings’
pursuant to [R.C.] § 2329.66(A)(13).” Minton, 348 B.R. at 472. Thus, the Trustee’s objection to
the Debtor’s claim of exemption therein was sustained. However, it was not just Kokoszka that the
Court relied upon; rather, there were a number of cases decided under the modern Bankruptcy
Code of 1978 that had concluded a tax refund is a refund of “taxes” and not a refund of “earnings”
such that other state’s wage exemption laws were held to not apply in the same situation. Id. at
470-71 (citing Manchester v. Annis (In re Annis), 232 F.3d 749, 752 (10th Cir. 2000) (citing the
Internal Revenue Code for the proposition that any money withheld from earnings is “taxes” even
if later refunded); Wallerstedt v. Sosne (In re Wallerstedt), 930 F.2d 630, 631-32 (8th Cir. 1991);
In re Rangel, 317 B.R. 553, 555 (Bankr. D. Kan. 2004) (concluding that a tax refund constitutes a
return of “taxes” and not “earnings” and is, therefore, not entitled to an exemption for earnings
under Kansas state law); In re Lancaster, 161 B.R. 308, 309 (Bankr. S.D. Fla. 1993); In re Miles,
153 B.R. 72, 73-74 (Bankr. N.D. Okla. 1993); In re Orndoff, 100 B.R. 516, 519-20 (Bankr. E.D.
Cal. 1989)). In any event, the conclusion of Minton was as represented by the Trustee in this case.
D. 	In re Cook, 406 B.R. 770 (Bankr. S.D. Ohio 2009), In re Sparks, 410 B.R. 602
(Bankr. S.D. Ohio 2009), and In re Wood, 459 B.R. 263 (Bankr. S.D. Ohio 2011)
Several years after the Minton opinion was issued, this Court reached a different conclusion
with regard to a Trustee’s objection to a Debtor’s claim of exemption in a tax refund based on
three other exemptions in R.C. § 2329.66; namely, (A)(10)(a), (A)(9)(c), and (A)(17), concerning
Ohio Public Employee Retirement System benefits, Ohio unemployment compensation benefits,
and social security benefits, respectively. In re Sparks, 410 B.R. 602, 603-04 (Bankr. S.D. Ohio
2009) (finding that federal tax refunds traceable to benefits covered by those subparagraphs of
R.C. § 2329.66 were exempt). In Sparks, the Trustee “primarily relie[d] upon” Kokoszka and
Minton. Id. at 604. But the United States Bankruptcy Judges then sitting in the Western Division
of this Court in Dayton agreed that the theory underpinning the conclusion in the Minton opinion
did not apply to the other Ohio exemptions at issue in Sparks and In re Cook, 406 B.R. 770 (Bankr.
S.D. Ohio 2009). Sparks, 410 B.R. at 604-07. The question then, for purposes of this case, is
whether Minton is still good law.
Sparks appears, in part, to potentially conflict with the rationale underlying Minton,
wherein it states that “the Trustee has cited no cases or countervailing policies suggesting that a
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debtor should be deprived of exempt funds simply because the funds were temporarily held by
taxing authorities” and “there is no discernable critical distinction between exempt funds held in a
bank or investment account and funds retained in the U.S. Treasury and returned as a tax refund
as long as those funds are reasonably traceable.” Sparks, 410 B.R. at 606-07. In other words, the
principle in Minton that once funds are paid to a taxing authority they become “taxes” and not
“earnings” pursuant to the Internal Revenue Code such that a tax refund is of “taxes” and not of
“earnings” did not carry the day in either Cook or Sparks when exemptions other than the wage
exemption were at issue. The “traceable” concept in Cook and Sparks, if correct, seemingly could
be extended to other types of exemptions. However, the other types of Ohio exemptions at issue
in Sparks and Cook, and subsequently at issue in In re Wood, 459 B.R. 263 (Bankr. S.D. Ohio
2011),10 are not presently before this Court, such that this Court will look back to and rely on
Minton and the Supreme Court of the United States’ opinion in Kokoszka, as well as the body of
case law from outside this District supporting Minton’s conclusion, and the Court does not need
to further analyze the carefully reasoned opinions in Cook, Sparks, or Wood.11 Rather, for purposes
10 In Wood, the Western Division of this Court in Cincinnati overruled the Trustee’s objection to the Debtor’s claim of
exemption in a tax refund under R.C. § 2329.66(A)(9)(G), which applied to “the Earned Income Credit and the Child
Tax Credit[.]” 459 B.R. at 265 (concluding “[t]his Court further finds that the balance of the Debtor’s federal tax
refund remaining on hand in cash as of the filing date is traceable to the portion of the Debtor’s tax refund that is
exempt pursuant to Section 2329.66(A)(9)(g) of the Ohio Revised Code.”).
11 A subsequent opinion by the B.A.P. for the Tenth Circuit, which denied an exemption claimed in a federal tax refund
generated from withholdings from “wages, unemployment compensation, and a retirement plan distribution– together
with a Making Work Pay credit” under Wyoming law reached the opposite conclusion from Sparks and Cook, although
citing the same Tenth Circuit opinion, Annis, that was relied on in Minton, focusing on the fact that “the Internal
Revenue Code deems the money withheld from an employee’s wages to constitute a ‘tax’ ” such that “[i]f the
withholding ‘tax’ exceeds ‘tax liability’ under the [Internal Revenue] Code, then the Commissioner refunds the
difference.” Hebert v. Royal (In re Hebert), No. WY-10-080, 2011 Bankr. LEXIS 1631, at *2, 14-15 (B.A.P. 10th Cir.
May 3, 2011) (citing 26 U.S.C. § 6402). Fundamentally, Hebert could not square the concept that wages once paid to
the Treasury are considered “taxes” under the IRC with the concept of tracing – that non-wage funds exempted by
state law could retain their exempt character and not become “taxes” even after paid to the Treasury, notwithstanding
application of provisions of title 26 of the United States Code (the “Internal Revenue Code” or “IRC”). As noted in
Hebert, “the Tenth Circuit’s analysis is equally applicable to the facts and law of this case because the taxes withheld
from Debtor’s unemployment compensation and retirement distribution are governed by the same Internal Revenue
Code language.” Id. at *15 (citing 26 U.S.C. § 3402(p)(2)). “Again, the language in 26 U.S.C. § 3402(a)(1) relied
upon by the Tenth Circuit in Annis to deem the funds withheld to be a ‘tax’ is equally appliable here.” Id., at *19.
Although Ohio law may differ from Wyoming law, the description of tracing in Hebert appears to be at odds with the
rationale of Sparks based on Daugherty v. Central Trust Co. of Northeastern Ohio, N.A., 28 Ohio St.3d 441 (1986).
Id. at *12 (“The Sparks bankruptcy court reasoned that ‘[i]n this context, there is no discernable critical distinction
between exempt funds held in a bank or investment account and funds retained in the U.S. Treasury and returned as a
tax refund as long as those funds are reasonably traceable.’ ”). As it concerns the tax refund amounts addressed in
Cook, the opinion was not based on the Supreme Court of Ohio’s decision in Daugherty, which concerned tracing into
a checking account; rather, because the funds had been “received by the Debtor in the form of a tax refund” this Court
found there was a lack of state law and proceeded to “decide how an Ohio court would resolve the issue.” Cook, 406
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of this Memorandum Opinion and Order, this Court adheres to the approach in Minton. It does not
appear that any court, in the context of a federal tax refund, has applied the tracing concept to
extend the Ohio wage exemption to a refund of taxes derived from withheld wages, which are
different than “tax credits created by Congress to assist those with children and with low incomes.”
In re Vance, No. 23-30368, 2023 Bankr. LEXIS 1413, at *5 (Bankr. S.D. Ohio May 23, 2023)
(citing In re Maine, 461 B.R. at 733) (other citations omitted).
Further support that Minton remains good law, at least for the situation presently before
this Court, is set forth in a 2015 opinion from the Bankruptcy Court for the Northern District of
Ohio, Western Division also dealing with the Ohio wage exemption (albeit in a different situation
concerning “ ‘the 25% the creditor collected on the garnishment that debtor could not protect’ ”):
It is possible that the Ohio Supreme Court might deny the
exemption on a different basis: that the funds are no longer subject
to tracing, having become something other than ‘personal earnings’
under the statute. In cases where § 2329.66(A)(13) has been used to
claim an exemption in federal tax refunds, courts have rejected those
claims because the funds from a tax refund are no longer wages. See,
Kokoszka v. Belford, 417 U.S. 642 . . . (1974) (tax refunds not
subject to exemption under the Federal Consumer Credit Protection
Act, 15 U.S.C. § 1673, limiting wage garnishments); In re Minton,
348 B.R. 467, 470-[]72 (Bankr. S.D. Ohio 2006) (child tax credit
not “personal earnings” for services subject to exemption under
§ 2329.66(A)(13)); In re Colbert, 385 B.R. 799 (Table), 2007 WL
4467570, 2007 Bankr. LEXIS 4164 (6th Cir. BAP Dec. 20, 2007)
(unpublished).
In re Slane, 537 B.R. 864, 868 (Bankr. N.D. Ohio 2015). At the same time, the Slane opinion also
partly rested its denial of the Debtor’s attempt to use the Ohio wage exemption on the limits of the
B.R. at 775 (citation omitted). In this context, the Court found that “[u]pon careful review . . . that Kokoszka does not
stand for such a sweeping principle of law and does not prohibit the application of the pertinent Ohio exemption
statutes [R.C.§§ 2329.66(A)(10)(a) and 145.56] to the funds in question.” 406 B.R. at 776. Therein, the concept of
funds being transformed into “taxes” once paid to the Treasury was also discussed, albeit in a footnote. Id. at 776-78
& n.10 (“It is true, of course, that funds received by a taxing agency and subsequently returned to a taxpayer as an
overpayment or a refund are governed by a completely separate body of tax law.” (citing Hamm v. James (In re James),
406 F.3d 1340 (11th Cir. 2005)). The James case, however, concerned “federal earned income tax credit (‘EITC’)”
payments received “with their tax refunds” and was a “public assistance” payment that could have been received
directly “with each payroll check” or “in a lump sum as a tax refund.” James, 406 F.3d at 1342, 1345; see also In re
Maine, 461 B.R. 723, 727-30 (Bankr. S.D. Ohio 2011) (applying the logic of Cook, as well as In re Patterson, 2010
Bankr. LEXIS 2899, at *4 (Bankr. N.D. Ohio Sept. 10, 2010) and Wood to conclude “that an Ohio court applying Ohio
law would find the funds represented by the tax refund which are reasonably traceable to the EIC and the CTC are
exempt under [R.C.] § 2329.66(A)(9)(g) even though the tax refund included nonexempt funds and the proceeds were
further commingled”).
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Ohio Supreme Court’s permitted use of “ ‘tracing’ of personal earnings to a checking account” in
the situation before it, in which the “[f]unds held by a creditor after a wage garnishment are not
‘readily available as needed for support and maintenance[.]” Id. at 868.12
E. 	Sixth Circuit B.A.P. Opinion
Also since Minton was decided, the Bankruptcy Appellate Panel (“B.A.P.”) for the Sixth
Circuit has spoken on a somewhat similar, albeit distinguishable, issue involving the applicability
of the Ohio wage exemption in R.C. § 2329.66(A)(13) to a tax refund received on account “of the
Earned Income Tax Credit (‘EITC’) in 26 U.S.C.S. § 32(a)(1).” Colbert v. Baumgart (In re
Colbert), No. 06-8046, 2007 Bankr. LEXIS 4164, at *1, 11 (B.A.P. 6th Cir. Dec. 20, 2007)
(quoting R.C. § 2329.66(A)(13)). Therein, Ms. Colbert filed her 2005 tax returns in order “to claim
the Earned Income Tax Credit” and she “received . . . an EITC in the amount of $2,750.” Id. at *4.
But the Debtor’s “federal tax return showed no tax withheld or due as the result of [her] meager
earnings[.]” Id., at *4. Ms. Colbert eventually claimed exemptions in the EITC under (A)(4)(a),
(A)(11), and (A)(13) of R.C. § 2329.66. Id. at *4-5. The B.A.P. held that the statutory description
of wages as “earnings of the person owed to the person for services” did not apply to the EITC
because it is not given to a person in exchange for their services. Colbert, 2007 Bankr. LEXIS
4164, at *11 (quoting R.C. § 2329.66(A)(13)). Thus, although ambiguities in the “possible
interpretations of an exemption provision” should be interpreted in favor the debtor, in this instance
the B.A.P. concluded that R.C. § 2329.66(A)(13) was not capable of the reading urged by the
Debtor because “[t]he EITC is not exempt pursuant to that section because it does not constitute
‘personal earnings owed to the person for services.’ ” Id. at *6, 12-13 (citing In re Lewis, 327 B.R.
12 To further complicate matters, the Court observed that “[t]here has been an intervening decision of the Ohio Supreme
Court regarding the application of § 2329.66(A)(13)” in State ex rel. Williams v. Trim, 2015-Ohio-3372. Slane, 537
B.R. at 868. The Williams opinion determined that an inmate had “a colorable argument that the funds in her inmate
account [we]re exempt from attachment because “[u]nlike in Daugherty, the funds in this case are not simply deposited
in a checking account.” State ex rel. Williams, 2015-Ohio-3372, ¶¶ 20-21 (discussing Daugherty, 28 Ohio St.3d 441).
Instead, “[t]he pension funds [we]re deposited into a bank account held jointly by Williams and her college-age
daughter.” Id., at ¶ 20. The Slane opinion therefore observed that the State ex rel. Williams opinion, which “traces
funds through two accounts – only one of which was identified as a checking account” would “appear[] to suggest
that cases limiting Daugherty’s holding to checking accounts are no longer good law.” 537 B.R. at 869 (citing Grant
Hosp. v. O'Nail, 1997 WL 101657 at *2, 1997 Ohio App. LEXIS 774 at **5-6 (Ohio App. 10th Dist. Mar. 4, 1997)
(Daugherty tracing rule applied only to checking accounts, not savings accounts). “Thus, whether the three bank
accounts are checking or savings accounts, Daugherty’s tracing rule for the personal earnings exemption would appear
to apply.” Id. (footnote omitted). Regardless, neither Daugherty nor State ex rel. Williams indicate that the tracing rule
for the Ohio wage exemption would apply when a debtor voluntarily transfers wages, through withholdings, to the
Internal Revenue Service, in which case the funds might never be the debtor’s again.
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645, 648 (Bankr. S.D. Ohio 2005)). In other words, although the B.A.P. found that its interpretation
was supported by Minton, which was “also in line with decisions of the Tenth Circuit [B.A.P.]
construing similar exemption provisions under Wyoming and Oklahoma law[,]” the B.A.P. did
not delve into the rationale of Kokoszka underlying Minton or discuss whether personal earnings
that are withheld as taxes and later refunded can retain their exemption as wages. Id., at *11-12
(citations omitted). Thus, the issue in Colbert was not the same as in Minton; namely, because
Colbert 	concerned 	whether 	the 	EITC 	could 	qualify 	as 	“personal 	earnings” 	under 	R.C.
§ 2329.66(A)(13), not whether personal earnings that are withheld and then refunded by the
Treasury can still be exempt under R.C. § 2329.66(A)(13) (or whether EITC funds could be
exempted under another subsection of R.C. § 2329.66).
V. 	Conclusion
Neither the Debtor nor the Trustee has identified any case law contrary to Minton in the
situation presented here. Similarly, the Court’s research has not revealed any law that would lead
it to a different conclusion than reached in Minton. Instead, the subsequent Slane case out of the
Northern District of Ohio observes this to be the state of the law. 537 B.R. at 868 (“In cases where
§ 2329.66(A)(13) has been used to claim an exemption in federal tax refunds, courts have rejected
those claims because the funds from a tax refund are no longer wages.” (citing Kokoszka, 417 U.S.
642; Minton, 348 B.R. at 470-72; Colbert, 385 B.R. 799)). Accordingly, this Court likewise holds
that the Ohio wage exemption in R.C. § 2329.66(A)(13) does not apply to that amount of Ms.
Hernandez’s federal income tax refund, $4,057, which is not exempt under other provisions of
R.C. § 2329.66, which conclusion is rooted in the Supreme Court’s opinion in Kokoszka.
Accordingly, based upon the foregoing and for the reasons stated on the record at the
hearing, the Court hereby SUSTAINS the Trustee’s Objection to Debtor’s use of the Ohio wage
exemption under Ohio Revised Code § 2329.66(A)(13) to exempt $4,057 of her 2025 federal
income tax refund, such that this amount is hereby determined to be non-exempt. As discussed at
the hearing, this Order makes no findings or conclusions with respect to turnover of the non-
exempt funds as that issue is not presently before the Court.
IT IS SO ORDERED.
Copies to:
Default List
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