The Bankruptcy Code and the Internal Revenue Code (I.R.C.) are statutory labyrinths of federal law. Copley v. United States called on the Fourth Circuit to resolve a question that arose when respective provisions of each collided. At the heart of Copley was a married couple seeking a fresh start with an expected $3,208 income tax refund. The Copleys wished to resolve their outstanding debts in bankruptcy and maximize the relief afforded to them under the Virginia homestead exemption provision, as permitted by the Bankruptcy Code. On the other side of the proverbial table was the Internal Revenue Service (IRS) armed with I.R.C. § 6402(a), which gives the agency discretion to offset a taxpayer’s refund against outstanding federal tax debt.

Whose interest should prevail, and consequently, who is entitled to the refund? Copley answered this question, resolving muddled statutory interpretations that have produced mixed results in bankruptcy courts both inside and outside of the Fourth Circuit. In particular, Copley established precedent favoring the IRS’s offset authority over the debtor’s right to exemption. This Article unpacks the issues at stake for bankruptcy debtors by explaining the IRS’s refund offset authority and outlining the bankruptcy case law split. Additionally, it assesses the lower court decisions in Copley before describing the broader significance of the Fourth Circuit’s decision.