The Supreme Judicial Court in Massachusetts has ruled that a woman whose work is “only” at home — meaning caring for minor children and running the household — has no property right in one-half of a federal tax refund, at least when her husband has filed for bankruptcy.
Here’s how the Boston Globe explains it:
Kirk Hundley, who ran a data analysis business, filed for bankruptcy in 2006 under his own name, separate from his wife. Around the same time, the couple filed for an amendment to their 2002 tax return, to carry back financial losses from years earlier.
[T]he trustee appointed by the bankruptcy court [,] had the Internal Revenue Service forward the $93,362 refund to her, arguing that the taxable income belonged to the husband alone, and so the refund should be considered as part of the bankruptcy proceedings.
Janice Hundley [the wife] argued that at least half the refund belonged to her, based on the equal property share assumed under their marriage, but also because they filed a joint return. She wanted the money because if it all goes to her husband, it could be lost in his bankruptcy.
The US Court of Appeals for the First Circuit agreed to hear the case, but asked the SJC — because property interests are defined by state law — to settle a question: Does Janice Hundley have a property interest in the tax refund, and if so, what factors should determine the extent of her interest.
The court rejected Janice Hundley’s arguments that the split should be equal, saying the split of spouses’ personal interests is triggered by divorce proceedings, not bankruptcy proceedings.
Read the full story here. The SJC’s decision in Hundley v. March is here (login required; sorry). Now that this state-law issue has been “resolved” (has it?), the First Circuit will now hear the federal bankruptcy case.
H/T Marie Newman.