Marriage of Baker, In re

• Decision Date: 12 February 1990
• Docket Number: No. 53A01-8910-CV-402,53A01-8910-CV-402
• Parties: In re The MARRIAGE OF Mary Jane BAKER, Appellant (Petitioner Below), and Ronald N. Montaperto, Appellee (Respondent Below).
• Court: Indiana Appellate Court

Page 82

550 N.E.2d 82

In re The MARRIAGE OF Mary Jane BAKER, Appellant (Petitioner Below),

and

Ronald N. Montaperto, Appellee (Respondent Below).

No. 53A01-8910-CV-402.

Court of Appeals of Indiana,

First District.

Feb. 12, 1990.

Richard S. Harrison, Cotner, Andrews, Mann & Chapman, Bloomington, for appellant.

Thomas A. Berry, Berry & Mills, Bloomington, David A. Reidy, Jr., Gosport, for appellee.

ROBERTSON, Judge.

This appeal stems from an order of the Monroe Superior Court which, for the second time, modified the terms of the decree of dissolution between the parties. Appellant Baker challenges the trial court's authority to allocate the federal income tax dependency exemption. She also contends the trial court erred in failing to find a support arrearage and in ordering an inadequate amount of support.

We affirm in part and reverse in part.

I.

In the original decree entered June 19, 1979, the dissolution court awarded the federal tax exemption for the eldest of the parties' two sons to Baker while permitting appellee Montaperto, the noncustodial parent, to claim the younger son, Mark, as a dependent. The order appealed from alters this arrangement slightly. It provides that so long as David is enrolled in college, the parties shall share the tax exemptions for their sons; thereafter, the right to claim the exemption for Mark will alternate between the parties with Montaperto claiming in tax year 1992 and Baker in 1993.

Baker maintains that Indiana trial courts no longer possess the authority to allocate the federal income tax exemption provided by Congress in 26 U.S.C. Sec. 151. Relying upon this district's decision in In re Marriage of Davidson (1989), Ind.App., 540 N.E.2d 641, Baker contends that with the amendment of 26 U.S.C. Sec. 152(e) in 1984, ¹ federal law's distribution of the exemption to the custodial parent supersedes contrary state court allocations absent a written waiver from the custodial parent or compliance with certain other narrow exceptions.

Montaperto argues that Davidson lacks the binding precedential effect Baker would accord it because the second district of this court explicitly approved a similar order entered after the 1984 amendment with the proviso that the noncustodial parent still must obtain the written waiver to be eligible to claim the exemption. See Blickenstaff v. Blickenstaff (1989), Ind.App., 539 N.E.2d 41.

Blickenstaff conflicts with Davidson insofar as Blickenstaff holds it is not an abuse of discretion, and hence, not reversible error, to award a post-January 1, 1985 dependency exemption. The decisions are not totally irreconcilable, however, because Blickenstaff, which necessarily recognizes that Indiana trial courts may consider the financial impact of an allocation of the exemption, cf. also, Davidson, 540 N.E.2d at 648, skirts the issue of whether an Indiana trial court can effectuate its allocation of the exemption by compelling the custodial parent to execute a written waiver meeting the requirements of Sec. 152(e)(2) of the code. Thus, both decisions implicitly accept, apart from the matter of federal preemption, that the General Assembly has vested Indiana trial courts with both subject matter jurisdiction and statutory authorization to determine which parent should be entitled to claim the exemption, and that Indiana trial courts retain the inherent equitable power to enforce their decrees. See, Hoyle v. Hoyle (1985), Ind.App., 473 N.E.2d 653, 656; Morphew v. Morphew (1981), Ind.App., 419 N.E.2d 770 and Corbridge v. Corbridge (1951), 230 Ind. 201, 102 N.E.2d 764.

With this proposition, we fully agree. Where we diverge from Davidson is with the court's assumption that the amendment of Sec. 152(e) necessarily leads to the conclusion that federal law divested state courts of jurisdiction to determine which party may claim the exemption.

Family law is a matter of peculiarly local concern. De Sylva v. Ballentine (1956), 351 U.S. 570, 580, 76 S.Ct. 974, 979, 100 L.Ed. 1415. Indeed, the whole subject of domestic relations between husband and wife belongs to the laws of the states and not to the laws of the United States. Rose v. Rose (1987), 481 U.S. 619, 625, 107 S.Ct. 2029, 2033, 95 L.Ed.2d 599; McCarty v. McCarty (1981), 453 U.S. 210, 221, 101 S.Ct. 2728, 2735, 69 L.Ed.2d 589 citing In re Burrus (1890), 136 U.S. 586, 593-594, 10 S.Ct. 850, 852-53, 34 L.Ed. 500. Consequently, when the courts face a potential conflict between state domestic relations law and federal law, and the question arises whether Congress, empowered by the Supremacy Clause of Art. VI., cl. 2 of the Constitution, has acted to displace state law, preemption is not to be lightly presumed.

The United States Supreme Court instructs that review under the Supremacy Clause is limited to a determination of whether Congress has "positively required by direct enactment" that state law be preempted. Rose, 481 U.S. at 625, 107 S.Ct. at 2033; Wetmore v. Markoe (1904), 196 U.S. 68, 77, 25 S.Ct. 172, 175, 49 L.Ed. 390. A mere conflict in words is not sufficient. State family law must do "major damage" to "clear and substantial" federal interests before the Supremacy Clause will demand that state law be overridden. Hisquierdo v. Hisquierdo (1979), 439 U.S. 572, 582, 99 S.Ct. 802, 808, 59 L.Ed.2d 1; Rose, 481 U.S. at 625, 107 S.Ct. at 2033. Analysis of the issue involves a two-fold inquiry: whether the state law as asserted conflicts with the express terms of federal law and whether its consequences sufficiently injure the objectives of the federal program to require its nonrecognition. ²

The section at issue does not speak directly to the power of state divorce courts to order a transfer of the deduction. It contains no express statutory directive prohibiting the exercise of state power or limiting the role of the states solely to one of evaluating the financial impact of the federal enactment. ³

The jurisdictional distinction between evaluation and effectuation finds no implicit support in the section as a whole either. Even before its amendment in 1984, Sec. 152(e) favored the custodial parent with the exemption by general rule. What changed was the evidentiary showing necessary to rebut the presumption that the custodial parent provided over one-half of the dependent child's support. Prior to its 1984 amendment, the act provided a noncustodial parent two avenues. The parent could either demonstrate that he or she contributed at least $1200 and over one-half of the child's support or the noncustodial parent could produce a judicial decree entitling him or her to the deduction and establish a contribution of at least $600 toward the dependent's support. Hence, the act expressly acknowledged the influence of state substantive law. Congressional recognition of state court power to effect claims for the deduction is retained in Sec. 152(e)(4). The enactment continues to permit noncustodial parents divorced prior to January 1, 1985 to prove entitlement by the previous method.

The 1984 version also does not adopt an irrebuttable presumption that the custodial parent is entitled to the economic benefit of the deduction; instead, it restricts the means of proof available to the noncustodial parent to a simple written waiver executed by the custodial parent and attached to the return. The amendment therefore continues to establish the procedure for demonstrating entitlement. It does not purport to alter the manner of adjudicating the substantive domestic relations question. Given the sanctity accorded state court authority over the issue of child support and state court experience in allocating resources following divorce, surely Congress would have been more explicit had it intended to displace a state court's power to enforce its own equitable decrees. Accordingly, it does not appear from the text or structure of Sec. 152(e) that Congress has "positively required by direct enactment" that state substantive law be preempted.

Nonetheless, even in the absence of a statutory proscription, explicit or implicit, state law may still be preempted to the extent it actually conflicts with federal law. Schneidewind v. ANP Pipeline Co. & ANP. (1988), 485 U.S. 293, 108 S.Ct. 1145, 1150, 99 L.Ed.2d 316; International Paper Co. v. Ouellette (1987) 479 U.S. 481, 491, 107 S.Ct. 805, 811, 93 L.Ed.2d 883. Such a conflict will be found when it is impossible to comply with both state and federal law, or where state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress. Schneidewind, 108 S.Ct. at 1150; California Federal Savings & Loan Ass'n v. Guerra (1988), 479 U.S. 272, 281, 107 S.Ct. 683, 689, 93 L.Ed.2d 613.

Compliance with Sec. 152(e) and a state court order of allocation is not a physical impossibility. State court orders allocating the exemption can be drafted to conform with the dictates of the section, giving the IRS the objective proof it desires. A custodial spouse's failure to execute the IRS form can be enforced with an adjustment in the amount of support or by threat of civil contempt.

Likewise, continued state court adjudication of the underlying substantive issue will not transgress the goals and policies of Congress in enacting modified Sec. 152(e). Congress created the 1967 amendment of the section with the objective of relieving the administrative difficulties involved in determining which parent meets the former section's requirements. See, S.Rep. 488, 90th Cong., 1st Sess., reprinted in 1967 U.S.Code Cong. & Ad.News 1527, 1528. Pursuit of the same goal is apparent in the legislative background of the 1984 amendments. See H.R.Rep. No. 98-432, Part II, 98th Cong., 2d Sess., reprinted in 1984 U.S.Code Cong. & Ad.News 697, 1139-1141. Again, the need to resolve the issue of eligibility without IRS involvement in factfinding motivates the committee to recommend a provision which will reduce subjectivity and uncertainty and minimize administrative...