Ford v. Ford

• Decision Date: 11 December 1991
• Docket Number: Nos. 89-2864,89-879,s. 89-2864
• Citation: 592 So.2d 698
• Parties: 17 Fla. L. Weekly D29 John Henry FORD, Appellant, v. Carol Lee FORD, Appellee. Annette GILLEY, Appellant, v. Alan GRAHAM, Appellee.
• Court: Florida District Court of Appeals

Page 698

592 So.2d 698

17 Fla. L. Weekly D29

John Henry FORD, Appellant, v. Carol Lee FORD, Appellee.

Annette GILLEY, Appellant, v. Alan GRAHAM, Appellee.

Nos. 89-2864, 89-879.

District Court of Appeal of Florida,

Third District.

Dec. 11, 1991.

Richard J. Burton, Ft. Lauderdale, for appellant John Henry Ford.

Carol Lee Ford, in pro. per.

Elizabeth S. Baker, Miami, for appellant Annette Gilley.

Greene & Marks and Cynthia L. Greene and Deborah Marks, Miami, for appellee Alan Graham.

Melvyn B. Frumkes, Miami, for the Family Law Section of The Florida Bar, amicus curiae.

Before SCHWARTZ, C.J., and BARKDULL, HUBBART, NESBITT, BASKIN, FERGUSON, JORGENSON, COPE, LEVY, GERSTEN, and GODERICH, JJ.

COPE, Judge.

The question presented for en banc consideration is whether, in a child support proceeding, the trial court may order the custodial parent to execute a release of the federal income tax dependency exemption, and thereby accomplish a transfer of the exemption from the custodial parent to the noncustodial parent. We hold that the trial court may do so, so long as the obligation to execute the Internal Revenue Service ("IRS") release of exemption is expressly conditioned on the noncustodial parent's being current in child support payments. In so holding we join the position of the clear majority of American jurisdictions and recede from this court's earlier ruling to the contrary in Villaverde v. Villaverde, 547 So.2d 185, 187 (Fla. 3d DCA 1989). ¹

I.

John and Carol Ford were divorced in 1987. The final judgment gave primary custody to Carol. The judgment obligated John to pay child support, but also provided that he would be permitted to claim the minor children as dependents on his income tax returns.

In order to claim the exemptions, John was required to attach IRS Form 8332 to his tax return. This is a form by which the custodial parent, in this case Carol, releases the dependency exemption. The form is designed so that it may be executed, inter alia, annually or permanently. ² The judgment did not specify whether Carol was required to execute an annual or permanent release.

In 1988 Carol executed a one-year release. In 1989 John requested a permanent release. Carol objected to a permanent release, fearing that she would be left with no recourse if John failed to pay the required child support. John filed a motion to compel, requesting the court to order Carol to execute the requested release. The trial court, relying on McKenzie v. Kinsey, 532 So.2d 98 (Fla. 1st DCA 1988), decided it had no power to order Carol to execute either the annual or permanent release form. The court denied relief to John and this appeal ensued.

Annette Gilley and Alan Graham were divorced in 1989. Annette was awarded custody. As a portion of the final judgment, Alan was required to pay child support for the parties' two children. In the order on motions for rehearing, the trial court ordered Annette to assign the dependency exemptions to Alan. Annette filed a plenary appeal from the final judgment and argued, inter alia, that McKenzie v. Kinsey does not permit the trial court to require a custodial parent to release the exemptions.

Amicus curiae The Family Law Section of The Florida Bar urged this court to adopt the majority American rule and hold that the trial court has the power to require a transfer of the dependency exemption. The Section argues that a transfer of the exemption can, in appropriate cases, produce higher net parental income which can then be translated into an order for higher child support payments. Because of the importance of the issue presented, this court granted en banc consideration.

II.

The current debate on this issue was occasioned by the 1984 amendments to the Internal Revenue Code ("I.R.C."). Under the pre-1984 version of I.R.C. Sec. 152(e)(2)(A), a state court had the authority to allocate the dependency exemption to the noncustodial parent as a portion of the child support decree, so long as certain IRS requirements were satisfied. If the noncustodial parent paid more than $1200 per child per year in child support and the custodial parent did not clearly establish that he or she paid more than the noncustodial parent for the support of the child, the noncustodial parent was treated as having provided more than half of the child's support and was thus entitled to the exemption. As might be expected, this provision embroiled the IRS in many disputes between parents who both claimed the deduction because both claimed to have provided more than half of the child's support in the given year.

In order to remove itself from the center of these time-consuming disputes, the IRS obtained legislation amending section 152. See House Report No. 98-432, Part II, reprinted in 1984 U.S.Code Cong. & Admin.News 697, 1140. The Tax Reform Act of 1984 ³ established a "bright line" rule that the custodial parent automatically receives the exemption unless he or she waives the right to claim it. ⁴ Because the 1984 amendments allocated the exemption to the custodial parent absent a waiver, debate has ensued as to whether 1984 amendments divested the state courts of the power to allocate dependency exemptions in child support proceedings. See Nichols v. Tedder, 547 So.2d 766, 770-80 (Miss.1989); Young v. Young, 182 Mich.App. 643, 453 N.W.2d 282, 284-286 (Mich.Ct.App.1990) (Sawyer, J. concurring).

In the period since 1984, this question has arisen in a large number of states. Almost all have concluded that the state courts have the power to transfer the dependency exemption. ⁵ Most states accomplish this reallocation by requiring the custodial parent to sign the IRS form relinquishing the right to the exemption. See Ritchey v. Ritchey, 556 N.E.2d 1376 (Ind.Ct.App.1990).

The minority rule is exemplified by the First District's decision in McKenzie v. Kinsey, which holds that the courts cannot reallocate the dependency exemption. 532 So.2d at 99-100. ⁶ The McKenzie court stated, "It is well established that deductions and exemptions provided in the taxing statutes are not to be extended beyond the clear import of the language used." Id. at 100 n. 3 (citations omitted). The court reasoned that the entitlement to the exemption is given to the custodial parent and, therefore, any reallocation of the exemption depended upon the custodial parent voluntarily signing a written declaration releasing the right to the exemption. It rejected the equitable considerations which were persuasive in other states, stating that "[t]he propriety of a deduction does not turn upon general equitable considerations ... but rather 'depends on legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.' ...." Id. at 100 n. 3 (citing New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440, 54 S.Ct. 788, 790, 78 L.Ed. 1348, 1352 (1934)). This court followed McKenzie in Villaverde v. Villaverde, 547 So.2d 185, 187 (Fla. 3d DCA 1989).

Upon consideration, we find the rationale of the majority view to be the more persuasive. The purposes of the 1984 amendments were: (1) to relieve the IRS from the burden of deciding which one of two claiming parents was entitled to the exemption and (2) "to achieve ... certainty in the allocation of the exemption for federal tax administration purposes." Cross v. Cross, 363 S.E.2d at 457 (emphasis in original). This was accomplished by establishing a simple, bright-line test for the IRS to use. For reasons of administrative convenience, the custodial parent is entitled to claim the exemption, unless the noncustodial parent attaches the appropriate form to the tax return, showing that the custodial parent has released the exemption. This allows the IRS to perform its work by simply examining the face of the tax forms. It is a matter of indifference to the IRS which parent receives the exemption, so long as only one parent claims it and the forms are in order. See id.

We are unable to agree with the view expressed in McKenzie that the 1984 legislation was intended to prevent the state courts from ordering the execution of the IRS waiver form in appropriate cases. If there were any intention of that sort, the statute would so provide or the Congressional history would so indicate. If Congress had intended the exemption to be a nontransferable substantive entitlement, it could have so provided, but instead the legislation specifically allows transfer by execution of the required IRS form. In sum, we can find no indication that Congress sought to foreclose state court action in this area. See Cross v. Cross, 363 S.E.2d at 458-59 (citing Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963); Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581 (1941)). We therefore recede from Villaverde and hold that the trial court has the power to reallocate the dependency exemption in appropriate cases by ordering the custodial parent to execute the release form. See Cross v. Cross, 363 S.E.2d at 457.

III.

We now turn to the reason the Family Law Section has requested this court to align itself with the majority rule. The Section's amicus brief states:

The section, and there is no question that, the Florida Legislature, the United States Congress and, of course, the Florida courts, are all concerned with providing for children as much support as is possible for their parents to manage, especially where the marriage of those parents has been dissolved. One painless way to enable the children to receive more support is to allow the wage earner (or if both parents are wage earners, then the wage earner with the greater income) to take advantage of the tax savings afforded by the dependency exemption provisions of the Internal Revenue Code....

The tax savings afforded by the exemption in 1990 are clearly demonstrated by specifically examining the actual savings to taxpayers in after tax dollars under current tax law.

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