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House committee advances bill to protect EITC refunds from bankruptcy trustees
Summary
The House Revenue & Taxation Committee gave SB 112 a favorable recommendation to preserve Earned Income Tax Credit refunds from garnishment by bankruptcy trustees, a change sponsors say will protect low-income families without costing the state.
The House Revenue & Taxation Standing Committee voted Feb. 19 to send SB 112 (second substitute) to the House with a favorable recommendation after sponsor and public testimony.
Sen. Weiler told the committee the bill makes a limited change to the Utah Exemptions Act to ensure "earned income tax credit refunds ... would be preserved and that the trustee in bankruptcy would not be able to garnish those" so the refunds remain available to the qualifying family. He said the change is narrow and would not affect a local creditor’s ability to collect judgments.
Joel Marker, a recently retired federal bankruptcy judge who said he administered about 12,000 cases, urged the committee to advance the bill. "When the working poor file bankruptcy, the trustee will put his hand out where nobody else can and say, give me your earned income tax credit," Marker said, arguing trustees often claim EITC refunds that can be substantial for low-income households.
Representative Coford moved to favorably recommend the second substitute. After a brief summation by Sen. Weiler, the committee voted and the chair ruled the motion passed unanimously to send the bill forward.
Why it matters: Supporters said the change would protect a refundable federal benefit intended to assist low-income working families. The bill’s sponsor and the public witness emphasized it would not alter state creditors’ ability to collect state refunds or other judgments.
What’s next: The committee forwarded SB 112 to the House with a favorable recommendation.
