Wednesday, February 1, 2023 | Back issues
Courthouse News Service Courthouse News Service

N.Y. Tax Amendment Applies Retroactively

(CN) - The 2nd Circuit held that a 2005 amendment to New York's homestead exemption, which adjusted the tax exemption from $10,000 to $50,000 for inflation, should be applied retroactively to debt contracts and can be claimed in bankruptcies.

The court ruled that if state legislators had wanted the amendment to only apply to debt contracts before the amendment's effective date - Aug. 30, 2005 - then they would have used the same language in the 1977 amendment, which specifically stated that it should not be applied to debt contracts retroactively. Language from the 2005 amendment does not specifically make a statement denying retroactive application.

"Based on the absence of language barring the application of the Amendment to pre-enactment debts, and the legislative intent to provide for an immediate increased exemption, we cannot infer that the Legislature intended the Amendment to apply only prospectively," Judge Wesley wrote.

The court also acknowledged the economic conditions that led to the 2005 amendment. "In light of the legislative finding that the increased exemption amount was long overdue and that the old amount was unrealistic in today's economy, it would defeat the intent of the Legislature to judicially engraft an anti-retroactivity provision."

The ruling arises from a bankruptcy case between a debtor and CFCU Community Credit Union. The credit corporation claimed the debtor did not qualify for the 2005 exemption because the car loan originated from 2003, even though the debtors filed their petition in 2005.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.