                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 17-1192
                        ___________________________

          In re: Sheri Lynn Hanson, formerly known as Sheri Lynn Alger

                              lllllllllllllllllllllDebtor

                             ------------------------------

                                Sheri Lynn Hanson

                             lllllllllllllllllllllAppellant

                                          v.

                                 Randall L. Seaver

                        lllllllllllllllllllllTrustee - Appellee
                                     ____________

                    Appeal from the United States Bankruptcy
                      Appellate Panel for the Eighth Circuit
                                 ____________

                          Submitted: February 13, 2018
                           Filed: September 11, 2018
                                 ____________

Before SMITH, Chief Judge, MURPHY and COLLOTON, Circuit Judges.*
                    ______________________________



      *
       This opinion is being filed by Chief Judge Smith and Judge Colloton pursuant
to 8th Cir. Rule 47E.
SMITH, Chief Judge.

      Sheri Hanson filed for bankruptcy in 2015. She later sought to exempt a
property tax refund of $1,500, asserting that she could exempt the refund as
government assistance based on need under Minnesota law.1 The trustee objected to
Hanson’s amended exemption, and the bankruptcy court sustained the objection. The
Bankruptcy Appellate Panel (BAP) affirmed. Hanson appeals, and we affirm.

                                  I. Background
      Minnesota law provides a list of types of property that a bankruptcy debtor may
claim as exempt. See Minn. Stat. § 550.37. Subdivision 14 of Minnesota Statute
§ 550.37 exempts “[a]ll government assistance based on need” and provides, in
relevant part:

      All government assistance based on need, and the earnings or salary of
      a person who is a recipient of government assistance based on need,
      shall be exempt from all claims of creditors including any contractual
      setoff or security interest asserted by a financial institution. For the
      purposes of this chapter, government assistance based on need includes
      but is not limited to Minnesota family investment program,
      Supplemental Security Income, medical assistance, MinnesotaCare,
      payment of Medicare part B premiums or receipt of part D extra help,
      MFIP diversionary work program, work participation cash benefit,
      Minnesota supplemental assistance, emergency Minnesota supplemental
      assistance, general assistance, emergency general assistance, emergency
      assistance or county crisis funds, energy or fuel assistance, and food
      support. The salary or earnings of any debtor who is or has been an
      eligible recipient of government assistance based on need . . . shall, upon
      the debtor’s return to private employment or farming after having been

      1
       “Bankruptcy debtors may elect to use either the exemptions set forth in the
federal bankruptcy code or in the nonbankruptcy law of the debtors’ domicile.”
Sholdan v. Dietz, 108 F.3d 886, 887 n.2 (8th Cir. 1997) (citations omitted). Hanson
chose to protect her assets under the Minnesota exemption provisions.

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      an eligible recipient of government assistance based on need . . . be
      exempt from attachment, garnishment, or levy of execution for a period
      of six months after the debtor’s return to employment or farming and
      after all public assistance for which eligibility existed has been
      terminated. . . . The burden of establishing that funds are exempt rests
      upon the debtor.

Hanson argues that her property tax refund falls within the definition of “government
assistance based on need.” Id.

       The State of Minnesota Property Tax Refund Act provides three types of
refunds: (1) a refund for homeowners whose property taxes are above a certain
percentage of their household income, Minn. Stat. § 290A.04, subd. 2; (2) a refund
for renters whose rent constituting property taxes exceeds a certain percentage of their
household income, id., subd. 2a; and (3) a refund for homeowners whose property
taxes increased substantially, id., subd. 2h. Hanson’s refund falls in the first category.

       Under subdivision 2 of the Act, a homeowner whose property taxes are above
a certain percentage of their household income is eligible for a refund. See also id.,
subd. 2b (“The commissioner may reconstruct the tables in subdivision 2 for
homeowners to reflect the elimination of the homestead credit beginning for claims
based on taxes payable in 1990.”). The maximum refund a household can collect is
currently $2,710. See Minnesota Department of Revenue, Homeowner Schedule for
2017         (Filing          in     2018/Fiscal                 Year       2019),
http://www.revenue.state.mn.us/Forms_and_Instructions/ho_schedule_17.pdf. This
amount decreases as household income increases, but a household with an income of
up to $40,939 is eligible for the full $2,710. See id. Homeowners with household
incomes of $110,650 and up are not eligible for the refund. Id. Although the payment
is termed a “refund” under state law, it is actually a payment from the general treasury
rather than a return of funds paid by the taxpayer.



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       Subdivision 2a sets up a similar type of scheme for renters whose rent
constituting property taxes exceeds a certain percentage of household income.
Renters with household incomes of $59,960 and up are not eligible for the refund. See
Minnesota Department of Revenue, Renter Schedule for 2017 (Filing in 2018/Fiscal
Y        e       a        r                  2       0       1       9        )       ,
http://www.revenue.state.mn.us/Forms_and_Instructions/renter_schedule_17.pdf.
Subdivision 2h provides an additional refund for homeowners whose gross property
taxes payable have increased substantially over the past year. A homeowner whose
gross property taxes payable on a homestead increased more than 12 percent on the
same property is eligible for an additional refund, provided the increase is more than
$100 and is not due to improvements made to the property. The refund is “60 percent
of the amount of the increase over the greater of 12 percent of the prior year’s
property taxes payable or $100” and is available regardless of the homeowner’s
income. Minn. Stat. § 290A.04, subd. 2h.

                                  II. Discussion
     This case requires us to determine whether a Minnesota property tax refund is
exempt from the bankruptcy estate as “government assistance based on need” under
Minnesota law.

       When a party appeals a BAP decision, “we act as a second reviewing court of
the bankruptcy court’s decision, independently applying the same standard of review
as the BAP.” In re Lasowski, 575 F.3d 815, 818 (8th Cir. 2009) (citation omitted). We
review factual findings for clear error, In re Eilbert, 162 F.3d 523, 525 (8th Cir.
1998), and legal questions—including the statutory interpretation question presented
here—de novo. In re Benn, 491 F.3d 811, 813 (8th Cir. 2007). We construe
exemption statutes in the favor of debtors. In re Wallerstedt, 930 F.2d 630, 631 (8th
Cir. 1991). It is the trustee’s burden to demonstrate that a claimed exemption is
improper. Fed. R. Bankr. P. 4003(c).



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       When a debtor chooses to exempt property pursuant to state statute, we
determine eligibility by looking to state law. Under Minnesota law, the first step in
interpreting a statute is determining whether the statute is ambiguous. Eclipse
Architectural Grp., Inc. v. Lam, 814 N.W.2d 692, 700 (Minn. 2012). “A statute is
ambiguous ‘if it is reasonably susceptible to more than one interpretation.’” Id. at 701
(quoting Current Tech. Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543
(Minn. 1995)). When “a statute’s words are clear and unambiguous as applied to an
existing situation,” Minnesota courts “construe the words according to their common
and approved usage.” S.M. Hentges & Sons, Inc. v. Mensing, 777 N.W.2d 228, 231
(Minn. 2010) (citations omitted). Courts “go beyond the specific language of the
statute to determine the intent of the legislature” only if “the language of a statute is
unclear or ambiguous.” Emerson v. Sch. Bd. of Indep. Sch. Dist. 199, 809 N.W.2d
679, 684 (Minn. 2012) (citation omitted).

       We begin with the text of Minnesota Statute § 550.37, subdivision 14. The
Minnesota Legislature chose to define “government assistance based on need”
through a long, non-exhaustive list of government programs. While the programs
range in the services they provide, they all clearly aim to serve the basic needs of low
income, disabled, or elderly people living in Minnesota. The list demonstrates that the
key words in “government assistance based on need” are “based on.” Consequently,
there is only one reasonable interpretation of “government assistance based on need”:
government benefits that aim to provide the basic necessities to the needy.

       The more difficult question is whether the property tax refund at issue here fits
the Minnesota Legislature’s definition of “government assistance based on need.”
Hanson argues that In re Hardy, 787 F.3d 1189 (8th Cir. 2015), requires us to
conclude that it does. In re Hardy presented us with a similar question: whether the
Additional Child Tax Credit (ACTC), 26 U.S.C. § 24, could be exempted as a “public
assistance benefit” under Missouri bankruptcy law. Id. at 1192. We concluded it
could and based our decision largely on the amendments to the ACTC, which

                                          -5-
“enabled more low-income earners to claim a refund and increased the refund amount
for many low-income earners who previously were receiving a small refund.” Id. at
1193, 1195. To answer the question Hanson presents here, we conduct a similar
analysis to that in In re Hardy and examine the Minnesota Legislature’s “intent in
passing the [property tax refund] law, the history of the statute (including any
amendments), and the operation of the statute in practice.” Id. at 1193 (citations
omitted).

       The text of the Property Tax Refund Act is our first and strongest indication
that the refund is not government assistance based on need. The Act states that its
“purpose . . . is to provide property tax relief to certain persons who own or rent their
homesteads.” Minn. Stat. § 290A.02. It is noteworthy that the Act does not state that
its purpose is to provide property tax relief to needy individuals, such as those who
are low-income, disabled, unemployed, or elderly. Moreover, households earning up
to $105,499 are eligible for a property tax refund. Id. § 290A.04, subd. 2. Hanson
correctly points out that we declined to adopt a rule that assistance could not be
deemed to benefit the needy just because it also benefitted some non-low-income
families. In re Hardy, 787 F.3d at 1193. But that does not mean that the income
phase-out level is irrelevant. In In re Hardy, we noted that, in practice, a single parent
supporting one child would no longer be eligible for any ACTC if his or her income
exceeded $26,300. Id. at 1196. Here, in contrast, a household earning $100,000 and
paying a property tax rate of 1.19 percent—the state average effective rate in
Minnesota—on a $250,000 home would be eligible for a partial refund under
§ 290A.04, subdivision 2.

       When we consider other parts of § 290A.04, we find further evidence that the
Minnesota Legislature did not intend for the refund to constitute government
assistance based on need. Specifically, the additional refund under subdivision 2h for
homeowners whose gross property taxes payable on a homestead increased more than
12 percent is available regardless of the household’s income. Hanson urges us to

                                           -6-
ignore this subdivision and focus on only the subdivision that pertains to her. But we
do not “consider[] statutory terms in isolation.” In re Benn, 491 F.3d at 814 (citation
omitted). That the same statutory scheme also provides a property tax refund to
homeowners without regard to income, disability, or other type of need is another
indicator that the refund available under subdivision 2 is not government assistance
based on need.

      The Minnesota Supreme Court’s discussion of an earlier version of the statute
further suggests that the Minnesota Legislature did not intend for the benefit to be
based on need. According to the Minnesota Supreme Court, it was “clear that the
[Act’s] overall purpose is equalization, not only economic and social, but
geographical.” Murphy v. Hiniker, 261 N.W.2d 836, 840 (Minn. 1978). The Act was
intended to help equalize property burdens across the state. See id. And while the
court noted that it appeared that “the law was passed to help the poor,” it stated the
law was also passed to help “the middle class”—a level of income not generally
considered “needy.” See id.

       Hanson contends that the history of the Property Tax Refund Act shows that
it is designed to benefit low-income people. But the history of the Property Tax
Refund Act is distinguishable from that of the ACTC, which gradually developed to
overwhelmingly benefit the poor. See In re Hardy, 787 F.3d at 1195 (noting the
amendments to the ACTC “enabled more low-income earners to claim a refund and
increased the refund amount for many low-income earners who previously were
receiving a small refund”). A review of the amendments to the Property Tax Refund
Act demonstrates the opposite: the Minnesota Legislature has actually expanded
eligibility to more higher-income earners. In 1994, the Minnesota Legislature reduced
the additional percentage of the remaining amount of property taxes a claimant had
to pay before being eligible for the state refund and raised the income phase-out to
$61,929. The Minnesota Legislature raised the income phase-out again in 2001 to
$77,519. In 2008, it decreased the percentage-of-income threshold for the top five

                                         -7-
income brackets from 4 percent to 3.5 percent. The Minnesota Legislature increased
the income phase-out in 2011 to $100,799 and in 2013 to $105,500—the current
income phase-out. It also reduced the percentage-of-income threshold to 2.5 percent
for the top three income brackets. That the current property tax refund is not aimed
to benefit the needy becomes even clearer when we consider that, in 1983, the
Minnesota Legislature imposed an income phase-out of $40,000. In 1987, it reduced
the income phase-out even further to $35,000. But the Minnesota Legislature changed
course and, since 1994, has consistently made the refund available to more higher-
income earners and increased the refund amount available for higher-income earners.
In summary, an overwhelming emphasis on benefitting the poor does not exist.

      We conclude that the property tax refund does not fit within the Minnesota
Legislature’s definition of government assistance based on need and is therefore not
exempt.

                                 III. Conclusion
       Accordingly, we affirm the judgment of the Bankruptcy Appellate Panel.
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