Gwodz v. Gwodz

• Decision Date: 20 June 1989
• Citation: 234 N.J.Super. 56,560 A.2d 85
• Parties: Renee Ann GWODZ, Plaintiff-Appellant, v. Ronald GWODZ, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 56

234 N.J.Super. 56

560 A.2d 85

Renee Ann GWODZ, Plaintiff-Appellant, v. Ronald GWODZ, Defendant-Respondent.

Superior Court of New Jersey Appellate Division.

Submitted June 5, 1989.

Decided June 20, 1989.

Rosen & Avigliano, for plaintiff-appellant (Dennis J. Avigliano, Randolph, on the brief)

Glucksman & Weitzman, for defendant-respondent (Donald M. Weitzman, Morristown, on the brief).

Before Judges PETRELLA, SHEBELL and LANDAU.

The opinion of the court was delivered by

LANDAU, J.A.D.

Plaintiff-appellant Renee Ann Gwodz (Renee) and defendant-respondent Ronald Gwodz (Ronald) were divorced in 1985, and their property settlement agreement was incorporated into the judgment of divorce. Although containing a section respecting federal taxes, the agreement was silent as to allocation of income tax exemptions for the two children of the marriage, Sandra and Jason.

A post-judgment motion in 1986 resulted in establishment of support arrearages and a requirement that support payments be made through Probation. The 1986 order also enforced a cost of living adjustment and imposed limitations upon Ronald's visitation rights, pending psychological evaluation of both parties and the children.

In December 1987, Ronald moved to secure unsupervised visitation with Jason, and for visitation under psychological supervision with Sandra. He asked also that Renee be responsible to pay for Sandra's counseling, for Jason's additional counseling, and that Renee be compelled to attend counseling sessions without her present husband. Ronald further sought to reduce the arrearages, to require that all medical claims be made through his insurance carrier, and to be permitted to claim tax exemptions for both children. Renee's cross-motion requested continued psychological counseling, supervised visitation with Jason, proof that Ronald was receiving alcohol dependency and behavioral counseling, establishment of additional arrearages and counsel fees.

An order was entered on June 6, 1988 which reflected certain agreements reached by the parties on visitation and counseling issues, while reserving determination respecting arrearages and credits. The order also provided that:

[S]ubmission of medical bill claims to insurance carriers shall be as set forth in the prior Orders of this Court. Plaintiff shall forward legible copies of all medical bills to the defendant to submit to his insurance carrier and reimbursements from all policies shall be credited to Mr. Gwodz' obligations and any surplus payments shall be shared equally by the parties; and ... each party shall be entitled to claim one child as an exemption for income tax purposes; ...

Renee here appeals only from the above-quoted portion of the June 6 order, urging that it was error to allow Ronald to claim one child as a tax deduction and to provide that the children's medical bills shall be submitted, in the first instance, through his insurance carrier.

THE TAX EXEMPTION PROVISION

Two subquestions are presented by the tax exemption issue: authority of the court to make the order, and the adequacy of the record and findings in support of the court's exercise of such authority.

As to the question of authority for exercise of the power to order that each party shall be entitled to claim one child as an income tax exemption, we cannot speak to its persuasiveness with the Internal Revenue Service. However, as an exercise of the equitable powers of the Chancery Division, we are in accord with the substantial and, we think, better reasoned authority which supports the authority of a state court to exercise such allocation power. See, e.g., Lincoln v. Lincoln, 155 Ariz. 272, 746 P.2d 13 (Ct.App.1987); In re Marriage of Einhorn, 178 Ill.App.3d 212, 127 Ill.Dec. 411, 418-419, 533 N.E.2d 29, 36-37 (App.Ct.1988); Wassif v. Wassif, 77 Md.App. 750, 551 A.2d 935, 940 (Ct.Spec.App.1989), certif. den. 315 Md. 692, 556 A.2d 674 (1989); Fudenberg v. Molstad, 390 N.W.2d 19 (Minn.Ct.App.1986); In re Marriage of Milesnick, 765 P.2d 751, 753-754 (Mont.1988); McKenzie v. Jahnke, 432 N.W.2d 556 (N.D.1988); Fleck v. Fleck, 427 N.W.2d 355, 359 (N.D.1988); Hughes v. Hughes, 35 Ohio St.3d 165, 518 N.E.2d 1213 (1988), cert. den. 488 U.S. 846, 109 S.Ct. 124, 102 L.Ed.2d 97 (1988); Cross v. Cross, 363 S.E.2d 449, 456-460 (W.Va.1987); In re Marriage of Peacock, 54 Wash.App. 12, 771 P.2d 767 (Ct.App.1989); Pergolski v. Pergolski, 143 Wis.2d 166, 420 N.W.2d 414, 417 (Ct.App.1988). But see McKenzie v. Kinsey, 532 So.2d 98 (Fla.Dist.Ct.App.1988); Varga v. Varga, 173 Mich.App. 411, 434 N.W.2d 152 (Ct.App.1988); Lorenz v. Lorenz, 166 Mich.App. 58, 419 N.W.2d 770 (Ct.App.1988); Stickradt v. Stickradt, 156 Mich.App. 141, 401 N.W.2d 256 (Ct.App.1986); Theroux v. Boehmler, 410 N.W.2d 354 (Minn.Ct.App.1987); Gerardy v. Gerardy, 406 N.W.2d 10 (Minn.Ct.App.1987); Valento v. Valento, 385 N.W.2d 860 (Minn.Ct.App.1986); In re Marriage of Nishimura, 86 Or.App. 392, 738 P.2d 1018 (Ct.App.1987); In re Marriage of Vinson, 83 Or.App. 487, 732 P.2d 79 (Ct.App.1987), review den. 303 Or. 332, 736 P.2d 566 (1987); Gleason v. Michlitsch, 82 Or.App. 688, 728 P.2d 965 (Ct.App.1986); Davis v. Fair, 707 S.W.2d 711 (Tex.Ct.App.1986).

There are cases which hold that exercise by a state court of the power to determine a federal tax exemption is in violation of federal constitutional and statutory law. See, e.g., In re Marriage of Emery, 179 Ill.App.3d 744, 128 Ill.Dec. 569, 534 N.E.2d 1014 (App.Ct.1989); Sarver v. Dathe, 439 N.W.2d 548 (S.D.1989). We disagree with the applicability of those decisions, because we recognize that federal courts and agencies must be the ones who interpret, consistently with the objectives of Congress, the federal tax statutes. As recognized by the West Virginia Supreme Court of Appeals, however, the effect of the allocation of income tax exemptions for children by a state court is ultimately to alter the net income available for child support. A court may properly seek to maximize that net income and in doing so may, indeed should, recognize the beneficial impact of the exemption in adjusting the respective support obligations of each party. See Cross v. Cross, 363 S.E.2d at 460.

We recognize that § 152(e)(1) of the Internal Revenue Code (26 U.S.C. § 152(e)(1)) as amended effective shortly before the 1985 divorce of the parties, gives a custodial parent the right to the exemption, subject to waiver by that parent. Having associated ourselves with the Cross, Fudenberg, and Hughes lines of reasoning, we are satisfied that the trial court had the power to exercise authority to effectively allocate exemptions through use of its equitable power. We are concerned, however, with the failure of the trial judge to consider or to quantify the effect of that exercise upon each party, and the extent to which it would require reconsideration of the child support provisions of the judgment. Further, the trial judge should have considered the request for specific designation of exemptions, not merely as a call for resolution of an issue unconsidered in the settlement agreement, but in light of the fact that the 1984 Internal Revenue Code amendments embodied in § 152(e)(1) were in effect when the judgment in this case was entered in 1985. ¹ Thus, Ronald's 1988 motion was actually a request for change in the status quo respecting exemptions, not merely resolution of an...