THOMAS GRAY HULL, United States District Judge
Debtor Margaret Louise Bourne filed a petition for Chapter 7 bankruptcy relief on May 2, 2000. In her schedules, she claimed her anticipated 1999 income tax refund of $2,534.00 as exempt property. On July 10, 2000, she amended her schedules to add a nonpriority, unsecured debt to the Department of Housing and Urban Development (HUD) for the deficiency balance owing on a repossessed mobile home. Ms. Bourne received her discharge on August 4, 2000.
In this adversary proceeding, she claims that, during the automatic stay period, the Internal Revenue Service (IRS) inadvertently violated the stay by setting off part of her dischargeable debt to HUD against the 1999 income tax refund which she had claimed as exempt property. The IRS/HUD discovered this violation after her discharge and requested ex post facto relief from the stay in order to validate its exercise of offset rights. Ms. Bourne opposed the United States' motion for belated relief from the stay arguing that there was no offset right because there was no mutuality of debt between her pre-petition obligation to HUD and the IRS's prepetition obligation to refund her overpaid taxes; that even creditors without notice are bound by the automatic stay provisions of § 362; that a nonpriority, unsecured, dischargeable debt should not be set off against her exempt property; and that now that her debt to HUD has been discharged, HUD is permanently enjoined from attempting to collect any of it pursuant to 11 U.S.C. § 524. She asked the Bankruptcy Court to require the IRS to turn over her tax refund and pay her reasonable attorney fees for its violation of the automatic stay.
In a carefully researched memorandum of March 2, 2001, the Bankruptcy Court ruled against Ms. Bourne in all respects finding that the IRS may assert a right of offset in a debtor's tax refund even if the refund has been claimed as exempt property; that the right of offset survives discharge; and that the IRS's inadvertent violation of the automatic stay (caused by the debtor's belated listing of the HUD debt) did not preclude this setoff. Ms. Bourne has appealed to this Court from all of those decisions.
However, these weighty issues are not yet ripe for consideration. What is currently pending is a motion filed by the IRS to be dismissed as a party to the appeal. [Doc. 7]. It argues that it was not a party to the hearing in the bankruptcy case; that HUD is the true creditor in interest in this action; and that it was HUD not the IRS which moved for relief from the stay. In its brief the IRS states that it was not named as a party in the bankruptcy proceedings and that "inexplicably" Bankruptcy Judge Parsons referred to it as party. It also argues that this Court lacks jurisdiction over statutory setoffs of income tax refunds used to pay debts to other government agencies. 26 U.S.C. § 6402(f).
The Court finds Judge Parsons' inclusion of the IRS as a party to her ruling entirely explicable. The motion for relief from the automatic stay was filed by the United States on behalf of both the Department of Housing and Urban Development and the Internal Revenue Service. However, the Court agrees that the IRS has no financial interest in this case (Ms. Bourne owes no back taxes) and that HUD was the agency which, correctly or incorrectly, received Ms. Bourne's income tax refund.
Accordingly, the IRS is hereby DISMISSED as a party to this appeal and the Department of Housing and Urban Development is substituted as the correct appellee.