Wednesday, February 29, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES

I have also been consulted and/or retained on cases where the DOL investigated the claims by email and written correspondence.

Tuesday, February 28, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES

A telephone interview may be conducted by the DOL with either or both the claimant and the employer and a summary will be completed by the investigator.

Saturday, February 25, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES

Thus upon the employer's filing of a Notice of Protest, the DOL commences an investigation as to whether a claimant is entitled to benefits. The guiding statute is Section 593 of the Labor Law which provides (from the DOL website) as follows:

"Sec. 593. Disqualification for benefits.

1. Voluntary separation; separation for a compelling family reason. (a) No days of total unemployment shall be deemed to occur after a claimant`s voluntary separation without good cause from employment until he or she has subsequently worked in employment and earned remuneration at least equal to five times his or her weekly benefit rate. In addition to other circumstances that may be found to constitute good cause, including a compelling family reason as set forth in paragraph (b) of this subdivision, voluntary separation from employment shall not in itself disqualify a claimant if circumstances have developed in the course of such employment that would have justified the claimant in refusing such employment in the first instance under the terms of subdivision two of this section or if the claimant, pursuant to an option provided under a collective bargaining agreement or written employer plan which permits waiver of his right to retain the employment when there is a temporary layoff because of lack of work, has elected to be separated for a temporary period and the employer has consented thereto. .

Paragraph (a) as amended by L. 1999, Ch. 268, effective July 20, 1999. .

(b) A claimant shall not be disqualified from receiving benefits for separation from employment due to any compelling family reason. For purposes of this paragraph, the term "compelling family reason" shall include, but not be limited to, separations related to any of the following: .

(i) domestic violence, verified by reasonable and confidential documentation which causes the individual reasonably to believe that such individual's continued employment would jeopardize his or her safety or the safety of any member of his or her immediate family. .

(ii) the illness or disability of a member of the individual's immediate family. For the purposes of this subparagraph: .

(A) The term "illness" means a verified illness which necessitates the care of the ill person for a period of time longer than the employer is willing to grant leave (paid or otherwise). .

(B) The term "disability" means a verified disability which necessitates the care of the disabled person for a period of time longer than the employer is willing to grant leave (paid or otherwise). "Disability" encompasses all types of disability, including: (1) mental and physical disability; (2) permanent and temporary disabilities; and (3) partial and total disabilities. .

(iii) the need for the individual to accompany such individual's spouse (A) to a place from which it is impractical for such individual to commute and (B) due to a change in location of the spouse's employment. .

(c) A disqualification as provided in this subdivision shall also apply after a claimant`s voluntary separation from employment if such voluntary separation was due to claimant`s marriage. .

Subd. 1 as amended by L. 1981, Ch. 234 effective June 15, 1981, L. 1983, Ch. 415,
effective September 5, 1983, and L. 1987, Ch. 418, effective July 27, 1987, and further
amended by L. 1998, Ch. 589, effective April 1, 1999. .

Subd. 1 as amended by L. 2009, Ch. 415 effective May 20, 2009. .

2. Refusal of employment. No days of total unemployment shall be deemed to occur beginning with the day on which a claimant, without good cause, refuses to accept an offer of employment for which he is reasonably fitted by training and experience, including employment not subject to this article, until he has subsequently worked in employment and earned remuneration at least equal to five times his or her weekly benefit rate. Except that claimants who are not subject to a recall date or who do not obtain employment through a union hiring hall and who are still unemployed after receiving thirteen weeks of benefits shall be required to accept any employment proffered that such claimants are capable of performing, provided that such employment would result in a wage not less than eighty percent of such claimant's high calendar quarter wages received in the base period and not substantially less than the prevailing wage for similar work in the locality as provided for in paragraph (d) of this subdivision. No refusal to accept employment shall be deemed without good cause nor shall it disqualify any claimant otherwise eligible to receive benefits if: .

(a) a refusal to accept employment which would interfere with a claimant's right to join or retain membership in any labor organization or otherwise interfere with or violate the terms of a collective bargaining agreement shall be with good cause; .

(b) there is a strike, lockout, or other industrial controversy in the establishment in which the employment is offered; or .

(c) the employment is at an unreasonable distance from his residence, or travel to and from the place of employment involves expense substantially greater than that required in his former employment unless the expense be provided for; or .

(d) the wages or compensation or hours or conditions offered are substantially less favorable to the claimant than those prevailing for similar work in the locality, or are such as tend to depress wages or working conditions; or .

(e) the claimant is seeking part-time work as provided in subdivision five of section five hundred ninety-six of this title and the offer of employment is not comparable to his or her part-time work as defined in such subdivision. .

Subd.2 as amended by L. 1983, Ch. 415, effective September 5, 1983, and by L. 1983, Ch. 554,
effective July 20, 1983. Opening paragraph amended, and paragraph (a) repealed and new paragraph
(a) added by L. 1998, Ch. 589, effective April 1, 1999, and amended by L. 2000, Ch. 5, effective
February 15, 2000. Paragraph (d) as amended b L., 2002, Ch. 282, effective August 6, 2002. .

(e) added by L. 2009, Ch 282, effective May 20, 2009. .

3. Misconduct. No days of total unemployment shall be deemed to occur after a claimant lost employment through misconduct in connection with his or her employment until he or she has subsequently worked in employment and earned remuneration at least equal to five times his or her weekly benefit rate. .

Subd. 3 as amended by L. 1983, Ch. 415, effective September 5, 1983, and further amended
by L. 1998, Ch. 589 effective April 1, 1999. .

4. Criminal acts. No days of total unemployment shall be deemed to occur during a period of twelve months after a claimant loses employment as a result of an act constituting a felony in connection with such employment, provided the claimant is duly convicted thereof or has signed a statement admitting that he or she has committed such an act. Determinations regarding a benefit claim may be reviewed at any time. Any benefits paid to a claimant prior to a determination that the claimant has lost employment as a result of such act shall not be considered to have been accepted by the claimant in good faith. In addition, remuneration paid to the claimant by the affected employer prior to the claimant's loss of employment due to such criminal act may not be utilized for the purpose of establishing entitlement to a subsequent, valid original claim. The provisions of this subdivision shall apply even if the employment lost as a result of such act is not the claimant`s last employment prior to the filing of his or her claim. .

Subd. 4 as amended by L. 1991, Ch. 248, effective July 1, 1991, and further amended by
L. 1998, Ch. 589, effective April 1, 1999. .

5. Terms of disqualification. A disqualification pursuant to the provisions of this section shall not be confined to a single benefit year. .

§593 as amended by L. 1960, Ch. 783 effective May 16, 1960. ."

Friday, February 24, 2012

NEW YORK - DIVORCE LAW - MAINTENANCE AND CARRYING CHARGES

In June 2011, I made a motion for pendente lite relief in a matrimonial matter in Nassau County. The court awarded my client, the lower income earning spouse:

1. Temporary maintenance.

2. Child support

3. Higher income spouse to pay carrying charges on the marital residence.

4. Attorney fees and other expert fees.

But it may no longer be possible to get an award of temporary maintenance and carrying charges. The case is Khaira v Khaira from the First Department. The court held that carrying charges are part of the support award. The support award was vacated and the matter remanded back to the court below.

Khaira v Khaira

Thursday, February 23, 2012

NEW YORK - DIVORCE LAW - DEPENDENT CHILD TAX EXEMPTION

The following article was forwarded to me from the Nassau County Coalition Against Domestic Violence which I thought was interesting as it brought up an issue which commonly comes up in divorce matters:

"# 59 - Dependent child tax exemption: Can it be awarded to a noncustodial parent?
Listserve Monograph # 59 (11/01/2010) rev. 10.8

AWARDING THE DEPENDENT CHILD TAX EXEMPTION:
Does the judge have the authority?

© Lawrence D. Gorin, Attorney at Law, Beaverton, Oregon

Part 1:
Divorce court’s “award” of dependent child tax exemption.

Introduction and background

When rendering judgments involving custody and child support obligations it is not unusual for judges to include provisions that purport to “award” or “allocate” between the parents the right to claim the dependent child tax exemption. In doing so, it is believed by all concerned --- albeit incorrectly for the reasons explained in this article --- that the court has legal authority to make such an “award.”

In sum, state court judges do not have the legal authority to award or allocate between competing parents the right accorded by federal law to a custodial parent to claim the dependent child tax exemption for a qualifying child. And this has been the law since 1985. As correctly explained by the Oregon Court of Appeals in Gleason v. Michlitsch, 82 Or App 688, 692-93, 728 P2d 965 (1986).
“Present IRC § 152 [26 USC § 152] contains no provision recognizing a state court award of a dependency exemption when the parents have been married but later have divorced or separated, except for decrees made before January 1, 1985. There is now no federal statutory basis for a state court to award the dependency exemption.” 82 Or App at 693 fn 6. [Emphasis supplied.]

General overview

In general, federal law allows a taxpayer to claim an exemption for a dependent child if certain conditions and requirements specified in the law are fulfilled or otherwise satisfied. In the case of taxpayers who are parents of the same dependent child but who each file a separate income tax return, special rules are applied to determine which parent will be entitled to claim the exemption and, consequently, which one will not.

For a child who, for more than one-half of the year, is in the custody of one or both divorced or legally separated parents, or parents (regardless of marital status, including unmarried parents) who live apart at all times during the last six months of the year, who together provide over one-half the child’s total support during the calendar year, the parent having custody for the greater portion of the year is deemed as the child’s “custodial parent” and on that basis will generally have the exclusive right to claim the dependent child tax exemption. However, in such case, the custodial parent may waive and release the right to claim the exemption, pursuant to procedures spelled out in the applicable law and federal regulations, thereby allowing the exemption to be claimed by the parent who had custody for the lesser portion of the year, i.e., the “noncustodial parent.”

Historical context

To fully understand the issue under discussion, a review of the history of the relevant tax law is helpful, perhaps even necessary.

The entitlement of a taxpayer to claim an exemption for a dependent child has always been premised, inter alia, on the taxpayer’s having provided more than half of the child’s total support for the calendar year in question. This is referred to by the Internal Revenue Service (IRS) as the “support test” requirement. For divorced and separated parents (and, more recently, never-married parents), Congress has over the years enacted “special rules” that, in general, treat the child’s custodial parent as having satisfied the “support test,” thereby allowing that parent to claim the exemption for a joint child, without regard to the amount of parental support actually provided by that parent. The special rules further provided for certain exceptions that, if applicable, would allow the exemption to be claimed by the noncustodial parent.

Federal tax law prior to 1985

Under the special rule in effect from 1967 through 1984, the dependent child tax exemption as between divorced and separated parents was accorded to the child’s custodial parent, who (by virtue of having custody) was “treated” as having provided more than half of the total support for the child during the tax year. 26 USC § 152(e)(1). “Custody” was determined by the terms of the most recent decree of divorce or separate maintenance, or a later custody decree. If custody was not specified, the parent with whom the child resided for the greater portion of the year would be deemed as the custodial parent.

However, section 152(e)(2) of the Internal Revenue Code, 26 USC § 152(e)(2), established two exceptions that, if applicable, would permit the noncustodial to be “treated” as having provided more than half of the total support for the child and, therefore, be entitled to claim the exemption.

Specifically, prior to 1985, 26 USC § 152(e)(2) said, in relevant part:
(2) The child of parents described in paragraph (1) shall be treated as having received over half of his support during the calendar year from the parent not having custody if---
(A)(i) the decree of divorce or of separate maintenance, or a written agreement between the parents applicable to the taxable year beginning in such calendar year, provides that the parent not having custody shall be entitled to any deduction allowable under section 151 for such child * * *.

Note that the statutory text of section 152(e)(2)(A) in effect from 1967 through 1984 expressly allowed a noncustodial parent, i.e., “the parent not having custody,” to claim the dependent child tax exemption if “the decree of divorce or of separate maintenance” so provided. (The statute also required that that parent must have also paid at least $600 in support for the child. Further, as an alternative to section 152(e)(2)(A), section 152(e)(2)(B) allowed the noncustodial parent to claim the exemption if that parent provided $1,200 or more for the child’s support and the custodial parent could not prove that he or she provided a greater amount.)

Consequently, if the state divorce court judge rendered a divorce decree that “awarded” the exemption to the noncustodial parent (and the noncustodial parent paid at least $600 for the support of the child), the divorce decree by itself would fully satisfy IRS requirement, without need of any written agreement or consent from the custodial parent.

Change in the law, effective 1985 and thereafter

In 1984, Congress amended and revised the wording of section 152(e)(2)(A) through the enactment of Section 423 of the Deficit Reduction Act of 1984 (aka the Tax Reform Act of 1984), Pub L 98-369, 98 Stat 494. The revised formulation applied to tax years after December 31, 1984. As amended, commencing 1985, paragraph (1) of section 152(e) expressly granted to the custodial parent the right to claim the exemption, subject to an exception established by paragraph (2) of section 152(e), which stated as follows:
(2) A child of parents described in paragraph (1) shall be treated as having received over half of his support during a calendar year from the noncustodial parent if-–
(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and
(B) the noncustodial parent attaches such written declaration to the noncustodial parent’s return for the taxable year beginning during such calendar year.

Thus, the text of section 152(e)(2)(A), as amended by the Tax Reform Act of 1984, allowed the noncustodial parent to claim the exemption in only one situation, to-wit: “the custodial parent signs a written declaration * * * that such custodial parent will not claim such child as a dependent,” with the written declaration then being attached to the noncustodial parent’s tax return.

Significantly, and in contrast to its pre-1985 version, the revised text of section 152(e)(2)(A) deleted and repealed the prior language that had expressly allowed a noncustodial parent to claim the dependency exemption “if the decree of divorce or of separate maintenance * * * [so] provides.”

Consequently, under the revised statute, a decree (or judgment) rendered by a state court judge that purported to award to a noncustodial parent the federal right to claim the dependency exemption (as was expressly permitted under the former version of the statute) was no longer by itself sufficient to allow the noncustodial parent to do so. Nor did the statute allow a noncustodial parent to claim the exemption simply on the basis of a judge’s signature on a divorce decree or judgment or other court order that purported to give that right to the noncustodial parent. See Miller v. Commissioner, 114 TC 184 (2000) (tax court rejected noncustodial parent’s argument as to right to claim dependency exemptions “because the State court gave him the right to claim them on his tax returns”; although state court order purported to grant dependency exemption to noncustodial parent, “a State court cannot determine issues of Federal tax law.”).

Current federal tax statute

Since 1984, Congress has on several occasions made further amendments to section 152(e). However, the basic principal that allows a noncustodial parent to claim the dependency exemption only upon the custodial parent’s written declaration that “such custodial parent will not claim such child” has remained unchanged.

In its latest formulation, section 152(e), as amended by the Working Families Tax Relief Act of 2004, Pub. L. 108-311 (HR 1308), 118 Stat. 1166), and as further amended by Sec. 404(a) of the Gulf Opportunity Zone Act of 2005 (GOZA),Pub. L. 109-135 (HR 4440), 119 Stat. 2577, 2632, effective for taxable years beginning after December 31, 2004, reads as follows:
26 USC § 152(e). Special Rule for Divorced Parents, Etc. --
(1) IN GENERAL - [In summary form, this paragraph provides as follows: Notwithstanding 26 USC §§ 152 (c)(1)(B), (c)(4), or (d)(1)(C), a child will be treated as the qualifying child * * * of his or her noncustodial parent if all of the following apply:
1. The parents (a) are divorced or legally separated under a decree of divorce or separate maintenance; or (b) are separated under a written separation agreement; or (c) lived apart at all times during the last six months of the year; and
2. The child received over half of his or her support for the year from the parents; and
3. The child is in the custody of one or both parents for more than half of the year; and
4. The requirements described in paragraph (2) or (3) of this subsection are met.]

(2) EXCEPTION WHERE CUSTODIAL PARENT RELEASES CLAIM TO EXEMPTION FOR THE YEAR - For purposes of paragraph (1), the requirements described in this paragraph are met with respect to any calendar year if--
(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and
(B) the noncustodial parent attaches such written declaration to the noncustodial parent’s return for the taxable year beginning during such calendar year.

(3) EXCEPTION FOR CERTAIN PRE-1985 INSTRUMENTS-
[Omitted from this article. Not relevant to present discussion.]

(4) CUSTODIAL PARENT AND NONCUSTODIAL PARENT - For purposes of this subsection--
(A) CUSTODIAL PARENT - The term “custodial parent” means the parent having custody for the greater portion of the calendar year.
(B) NONCUSTODIAL PARENT - The term “noncustodial parent” means the parent who is not the custodial parent.

NOTE: “Custody” is determined by counting the number of nights during which the child (1) sleeps at the parent’s residence (whether or not the parent is present), or (2) is in the company of the parent when the child does not sleep at a parent’s residence (for example, if the parent and child are on vacation). This is referred to as the “counting nights rule.” 26 CFR § 1.152-4(d)(1). If the child spends an equal number of nights with each parent, the parent with the higher adjusted gross income for the calendar year will be treated as the custodial parent. 26 CFR § 1.152-4(d)(4).

In sum, federal law, 26 USC § 152(e), as amended by Congress in 1984 and further amended several times thereafter, allows a noncustodial parent to claim the dependent child tax exemption only upon the custodial parent’s written declaration in which the custodial parent effectively waives and foregoes the right and releases it to the noncustodial parent. (And it should be noted that the determination of which parent is the custodial parent and which is the noncustodial parent is controlled by the federal definitions, irrespective of any designations made in the state court custody judgment.)

The federal statute makes no provision allowing a state court judge to award or allocate between competing parents the right to claim the exemption, nor does the statute include any provision authorizing a state court judge to order or compel the custodial parent to involuntarily waive the right to claim the exemption. Indeed, such action on the part of a state court judge would effectively constitute state action directly infringing on the custodial parent’s federal right as accorded by federal law. Given the Supremacy Clause of the US Constitution, Art. VI, this is something that state court judges may not lawfully do.

Latest word from IRS

On July 2, 2008, the Internal Revenue Service (IRS) published a revised and finalized regulation --- Treas Reg § 1.152-4 --- detailing the procedural requirements that the IRS will apply in implementing section 152(e) and in resolving disputes arising between competing taxpayers. The finalized regulation is applicable to taxable years beginning after July 2, 2008, and appears in theCode of Federal Regulations as 26 CFR § 1.152-4. The new regulation supersedes and replaces the prior version of Treas Reg § 1.152-4 as well as a temporary regulation, Treas Reg § 1.152-4T, that had been in place since 1984.

The finalized IRS regulation as published in the Federal Register, 73 Fed Reg 37797-37804 (2008), is viewable online at:
http://edocket.access.gpo.gov/2008/pdf/E8-15044.pdf

The finalized regulation as published in the Federal Register was accompanied by a report discussing the various suggestions received by IRS in the process of formulating the final regulation. Of particular interest, it is reported at 73 Fed Reg 37800 that the IRS had received but rejected a suggestion that the regulation include a provision allowing a noncustodial parent to claim a child as a dependent if a divorce decree allocates the exemption to that parent, regardless of whether the custodial parent releases the right to claim the child. The suggestion was rejected because the federal tax statutes, 26 USC §§ 151 and 152, would not allow for this to be done. Specifically, according to the IRS report:
"A state court may not allocate an exemption because sections 151 and 152, not state law, determine who may claim an exemption for a child for Federal income tax purposes." 73 Fed Reg 37800 (column 1).

Understanding the current tax law

From 1984 through 2004, the wording of section 152(e) established an express rule that granted to the child’s custodial parent the right to claim the dependent child tax exemption, subject to an exception that, if applicable, allowed the exemption to be claimed by the noncustodial parent. However, section 152(e) was reworded through statutory amendments that took effect in 2005.

Under the amendments to section 152(e) made by the Working Families Tax Relief Act of 2004 (WFTRA) and the Gulf Opportunity Zone Act of 2005 (GOZA), effective 2005, there is no longer any rule the expressly states that the custodial parent has the right to claim the exemption. Instead, as amended, paragraphs (1) and (2) of section 152(e) combine to simply declare that a child will be treated as the “qualifying child” of the noncustodial parent if the parents are divorced, legally separated, or live apart during the last six months of the calendar year and the conditions specified in the statute are satisfied, including the condition that the custodial parent sign a written declaration agreeing not to claim the exemption.

Thus, as presently formulated, the custodial parent’s signing a written declaration agreeing not the claim the exemption does not establish an exception to any express rule that would otherwise favor the custodial parent. Rather, the custodial parent’s signing a written declaration is a condition precedent to the application of section 152(e). If the custodial parent does not sign the written declaration, section 152(e) does not apply. And in that situation, the parent entitled to claim the exemption for a qualifying child will be determined by the provisions of section 152(c).

In particular, section 152(c)(1)(B) defines a “qualifying child” as an individual “who has the same principal place of abode as the taxpayer for more than one-half of such taxable year.”

Under section 152(c)(4)(B), if the parents of an otherwise qualifying child do not file a joint income tax return (as typically would be the case for divorced, separated and never-married parents), the child will be treated as the qualifying child of “the parent with whom the child resided for the longest period of time during the taxable year.” (The statute further specifies that if the child resides with both parents for the same amount of time during such taxable year, the child will be the qualifying child of the parent with the highest adjusted gross income.)

However, notwithstanding section 152(c)(4)(B), the child will be treated as the qualifying child of the parent with whom the child resided for the shorter period of the year if the conditions specified in section 152(e) are satisfied (one of which is the signing of a written declaration by the parent with whom the child resided for the longer period of the year, i.e., the “custodial parent,” agreeing not the claim the exemption).

Thus, given the text of 26 USC § 152(e) and the provisions of 26 CFR § 1.152-4(d), the determination of which parent qualifies as the child’s “custodial parent” for purposes of claiming the dependent child tax exemption is nowadays often a year-by-year determination that awaits end-of-year determination, at which time the number of nights the child spent with each parent will be counted. The parent with whom the child spent the GREATER number of nights is the “custodial parent” for that particular year and therefore has the right to claim the dependent child tax exemption, UNLESS he or she voluntarily agrees to waive the right to claim the exemption and thereby allow the exemption to be claimed by the “noncustodial parent” (the parent with whom the child spent the LESSER number of nights). The waiver of the right to claim the exemption is accomplished by signing IRS Form 8332, which the noncustodial parent then attaches to his/her tax return.

Summary of current law

In its current form, section 152(e) permits the child of a parent who did not have custody of the child for the greater portion of the year, i.e., the noncustodial parent, to be “treated” as that parent’s “qualifying child” --- thereby allowing that parent to claim the dependent child tax exemption --- if (and only if) the custodial parent signs a written declaration agreeing not to claim the child as a dependent (and the noncustodial parent attaches the written declaration to his or her tax return).

IRS Form 8332 (“Release of Claim to Exemption for Child of Divorced or Separated Parents”) will fully satisfy the “written declaration” requirement. A written declaration not on Form 8332 may be used, but only if it conforms to the substance of Form 8332 and is executed for the sole purpose of serving as the required written declaration. More importantly, a court order or decree or a separation agreement may not serve as a written declaration. IRS Treas Reg § 1.152-4(e)(ii). Form 8332 is available online at the IRS website: http://www.irs.gov/pub/irs-pdf/f8332.pdf

Contractual enforcement of parties' agreement

If the custodial parent voluntarily agrees to waive the right to claim the dependent child exemption and allow the noncustodial parent to do so and the custodial parent thereafter abides by the agreement by signing and furnishing to the noncustodial parent the written declaration (usually IRS Form 8332) that is needed in order to enable the exemption to be claimed by the noncustodial parent, there will be no problem. However, if such an agreement has been made and the custodial parent thereafter breaches the agreement by refusing the sign Form 8332, resulting in monetary loss to the non-breaching party, the non-breaching party may seek recovery of the financial loss through an independent lawsuit seeking damages for breach of contract.

Further, under Oregon law, if the custodial parent has agreed to waive the entitlement to claim the exemption and allow it to be to claimed by the noncustodial parent, and such agreement is expressed in a stipulated court order or judgment (or is contained in a judgment that incorporates a settlement agreement), enforcement of the agreement made be accomplished through an action within the judicial proceeding in which the agreement was made, as provided in ORS 107.104(2). Further, if the judgment specifically directs the custodial parent to implement the agreement by signing and furnishing IRS Form 8332 to the noncustodial parent, the custodial parent’s willful refusal to do so would be subject to compelled compliance through the imposition of remedial sanctions for contempt of court.

Amount of child support: consideration of tax consequences

Although a custodial parent’s right to claim the tax exemption for a dependent child is controlled by applicable federal law and is not subject to being altered by mandate of a state court judge, state court judges do have the authority to determine and establish the dollar amounts of child support that either parent may be required to pay to the other. And in doing so, the state court judge may appropriately recognize which parent has (or will have) the federal right to claim the exemption and may then take into consideration the tax consequences resulting therefrom when formulating and determining child support obligations.

Specific provision for Oregon decision makers to do this is found in ORS 25.280(9) and OAR 137-050-0725(9), allowing for child support amounts to be adjusted upon consideration of “the tax consequences, if any, to both parents resulting from * * * the determination of which parent will name the child as a dependent.” Keep in mind, however, that the Oregon Child Support Guidelines’ scale used for making child support determinations “presumes the parent with primary physical custody will take the tax exemption for the joint child(ren) for income tax purposes.” OAR 137-050-0725(9). If in a particular case the exemption is not taken by the parent having primary physical custody, “the rebuttals in OAR 137-050-0760 may be used to adjust the child support obligation.” OAR 137-050-0725(9).

Conclusion and Summary

1. As the IRS explains in the commentary accompanying the revised IRS Regulation on this issue, Treas Reg 1.152-4 (effective 7/2/2008), “A state court may not allocate an exemption because sections 151 and 152 (of the federal Internal Revenue Code), not state law, determine who may claim an exemption for a child for Federal income tax purposes."

2. Although having no authority to “award” the dependent child tax exemption, the court may nonetheless recognize which parent holds the right to claim the exemption and make take into consideration the resulting financial impact when making determinations as to child support obligations.

3. If the custodial parent has entered into a contractual agreement with the noncustodial parent by which the custodial parent agrees to waive the right to claim the exemption, financial loss incurred as a result of the breach of such agreement is subject to recovery through a legal action for breach of contract.

Thus, while divorced and never-married parents may formulate an enforceable agreement between themselves as to which parent will claim the dependent child tax exemption and which one will not, and while it is permissible for a state court judge to adjust child support amounts in consideration of which parent will claim the tax exemption for a dependent child and which one will not, a state court judge does not have authority to compel a parent who holds the federal right to claim the exemption to not exercise that right.
###

LAWRENCE D. GORIN
Attorney at Law
6700 S.W. 105th Ave., Suite 104
Beaverton, Oregon 97008
Phone: 503-716-8756
E-mail: LDGorin@pcez.com
Website: http://ldgorin.justia.net/index.com

Part 2:
Oregon case law re “award” of dependent child tax exemption.

Review of Oregon case law on the question of judicial authority to award or allocate the federal income tax dependent child exemption shows an evolving change in the appellate court’s legal analysis.

The Court of Appeals initially got it right in Gleason v. Michlitsch, 82 Or App 688, 692-93, 728 P2d 965 (1986). The court noted that under former Internal Revenue Code § 152(e)(2)(A), divorce courts had authority to order the allowance of the dependent child tax exemption to a non-custodial parent. However, the court further noted that that section of the federal tax code had been repealed by the 1984 Tax Reform Act. Consequently, as the court correctly explained:
“Present IRC § 152 [26 USC § 152] contains no provision recognizing a state court award of a dependency exemption when the parents have been married but later have divorced or separated, except for decrees made before January 1, 1985. There is now no federal statutory basis for a state court to award the dependency exemption.” 82 Or App at 693 fn 6. [Emphasis supplied.]

The court remained on track in Vinson and Vinson, 83 Or App 487, 732 P2d 79 (1987), when it stated, again correctly:
“We also vacate that portion of the judgment awarding husband the right to claim all four children as dependents for tax purposes on his state and federal tax returns. As noted in Gleason v. Michlitsch, supra, there is no federal statutory provision recognizing a state court’s authority to award a dependency exemption when the parents have been married but later have divorced or separated.” 83 Or App at 493-494.

And the proposition of law was repeated in Nishimura v. Nishimura, 86 Or App 392, 738 P2d 1018 (1987), wherein the court said, again correctly:
“We adhere to our decisions in Gleason v. Michlitsch, 82 Or App 688, 728 P2d 965 (1986), and Vinson and Vinson, 83 Or App 487, 732 P2d 79 (1987), where we stated that trial courts have no authority under present law to award a dependency exemption to a noncustodial parent." 86 Or App at 393. [Emphasis supplied.]

But things started to go astray with the decision in Richmond and Richmond, 103 Or App 55, 795 P2d 1104 (1990), in which the court said:
“We recognize that which parent qualifies for an exemption is a question of federal income tax law. [Citing Gleason v. Michlitsch.] The trial court nonetheless may determine which party may claim the child as a dependent * * * and may consider the tax impact on the parties as a result of that determination.” 103 Or App at 59.

Importantly, Richmond did not say that the trial court had authority to “award” the dependent child exemption. Rather, it said that the trial court may “determine” which party may claim the exemption. In hindsight, this phraseology has proven to be rather misleading. What should have been said, perhaps, is that the trial court may “recognize” (rather than “determine”) which party satisfies the federal tax code qualifications for claiming the exemption and may then consider the resulting tax impact when fixing the child support award.

Relying on Richmond, the court then went further off course with the decision in Ranes and Ranes, 118 Or App 264, 846 P2d 1195 (1993), in which the court affirmed a trial court judgment that awarded the dependent child exemption to the noncustodial parent and then remanded the case back to the trial court with the following admonition:
“[T]he child support guidelines are based on a presumption that the custodial parent will have the income tax exemption for dependent children. OAR 137-50-330(2)(a)(I) [now codified as OAR 137-050-0333(1)(i)]. On remand, the trial court must consider the effect of the award of the dependency exemption to husband when calculating child support under the guidelines.“ 118 Or App at 269. [Emphasis supplied.]

Soon after Ranes, the court decided Hay and Hay, 119 Or App 372, 850 P2d 410 (1993), in which the Court of Appeals, citing Ranes, directly proclaimed for the first time that:
“[T]he exemption can be awarded to the noncustodial parent if the tax consequences are considered in calculating the amount of child support.” 119 Or App at 374.

Hay then led to Rossi and Rossi, 128 Or App 536, 876 P2d 820 (1994), in which the court, citing the prior decisions of Richmond and Ranes and Hay, said:
“[T]he right to claim tax exemptions for a dependent child may be awarded to either party.” 128 Or App at 541.

And finally, the court arrived at Starke and Starke, 147 Or App 615, 939 P2d 46 (1997), in which the court appears to have come full circle, recognizing the controlling aspect of federal law but then apparently disregarding it:
“Federal tax law governs which parent qualifies for claiming a child as a dependent. However, the [state] court may adjudicate who can make the claim.” 147 Or App at 617. [Citing Ranes and Ranes as authority for the proposition.]

For parents who are divorced, legally separated, or who live apart at all times during the last six months of the year, and for never-married parents, 26 USC § 152(e) sets forth the controlling law and procedural requirements for determining which parent qualifies and has the right to claim the dependent child tax exemption and, more importantly, which one does not. The determination resulting from the application of 26 USC § 152(e) may not be changed by command of a state court judge. Oregon appellate court decisions that suggest otherwise are, quite bluntly, incorrect.

Although several technical changes to 26 USC § 152(e) (as amended by the Tax Reform Act of 1984) have been made, the federal statute remains substantively the same today as it did in did in 1984. With the federal statute remaining unchanged, confusion arises when a state appellate court, without analytical discussion, seemingly changes its interpretation of the federal statute from one case to the next. While the Oregon Court of Appeals correctly analyzed and applied the federal law provisions of 26 USC § 152(e) in its earlier decisions inGleason (1986), Vinson (1987), and Nishimura (1987), it appears that the court failed to do so in its decisions following Richmond (1990).

Final comment:

The Court of Appeals’ interpretation of the federal tax code as stated inGleason v. Michlitsch was correct when decided in 1986 and remains correct today: “There is now no federal statutory basis for a state court to award the dependency exemption.” 82 Or App at 693, fn 6.

For parents who are divorced, legally separated, or who live apart at all times during the last six months of the year, and for never-married parents, 26 USC § 152(e) sets forth the controlling law and procedural requirements for determining which parent qualifies and has the legal right to claim the dependent child tax exemption and, more importantly, which one does not. The determination resulting from the application of 26 USC § 152(e) may not be changed by command of a state court judge. Oregon appellate court decisions that suggest otherwise are, quite bluntly, incorrect.

Perhaps upon appropriate opportunity being presented the Court of Appeals might revisit the issue and revise the interpretation of 26 USC § 152(e) from that expressed in its post-Richmond decisions. It may be helpful to bench, bar and public to do so.
###

LAWRENCE D. GORIN
Attorney at Law
6700 S.W. 105th Ave., Suite 104
Beaverton, Oregon 97008
Phone: 503-716-8756
E-mail: LDGorin@pcez.com
http://ldgorin.justia.net/index.html"

Wednesday, February 22, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES


From the website of The Business Council of New York State, Inc. is this copy of a part of the Form LO 400P.

Tuesday, February 21, 2012

NEW ADDRESS AT LA OFFICE

As of March 1, 2012, the office of Probstein, Weiner & Butler, of which I am Special Counsel, will move to 1299 Ocean Avenue, Suite 306, Santa Monica, CA 90401. Phone 310-836-1400.

WEBSITE OF PROBSTEIN, WEINER & BUTLER

Saturday, February 18, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES


From the website of The Business Council of New York State, Inc. is this copy of a part of the Form LO 400.

Friday, February 17, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES

Of course, credibility issues are first made by the DOL at the investigation stage. After a claimant applies for benefits, an employer is notified and, if an objection is made, will file a Notice of Protest. As explained by the DOL:

"The Department will send you a Notice of Potential Charges (Form LO 400) when we determine your former employee is eligible to collect UI benefits. You can verify that UI benefits paid to former employees are correct based on the wage information. Report any discrepancy in wage information or disqualifying information you see on the Notice of Potential Charges (Form LO 400) as soon as possible. In most cases, this information will affect UI benefit payments from the date it is received."

NYS DOL - Important Notice to Employers How to Keep Your Unemployment Insurance (UI) Costs Down

Thursday, February 16, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES

Here is an example: claimant is denied benefits on the ground of misconduct. Claimant argues that on a certain date, employer made a certain statement allowing claimant to do a certain act. Employer argues that on that date, employer made a certain statement prohibiting claimant to do that certain act. So the issue was - who is the more credible witness.

Wednesday, February 15, 2012

NEW YORK UNEMPLOYMENT INSURANCE HEARINGS - CREDIBILITY ISSUES

So as a follow up on yesterday's post, most of the problems that have arisen in representing claimants is the issue of credibility. Basically, with issues of misconduct: the employer will argue that claimant performed an act of misconduct and the claimant will deny that such acts took place. With issues of voluntary separation, the claimant will argue that certain acts occurred which constituted a compelling reason to leave and the employer will deny that such acts took place. If the only testimony is oral testimony, then the problkem facing the ALJ is one of credibility.

Tuesday, February 14, 2012

ON ORAL TESTIMONY

Many times, in civil matters, the question of "what happened" comes down to "he said versus she said". The issue then becomes one of credibility: the trier of fact has to decide who is the more credible witness. Of course, in criminal matters, more is at stake as discussed in this article:

MSNBC - Witness error: How mind tricks can put the innocent behind bars

Monday, February 13, 2012

NEW YORK MORTGAGE FORECLOSURE

A website has been set up for consumers regarding the National Mortgage Settlement:

National Mortgage Settlement

Of course, you will note that the site does not yet have the full legal documentation underlying the settlement. The primary reason for this is that the mortgage settlement is not fully finalized. Additional banks still have the opportunity to join. And it appears that when the group of banks joining the settlement is finalized, the full documentation will arise.

An article discussing this is set forth herein:

BUSINESS INSIDER - Don't Be Sucked Into The Hysteria About The 'Missing' Mortgage Settlement Documents

Saturday, February 11, 2012

NEW YORK MORTGAGE FORECLOSURE

In discussing the various issues of the mortgage foreclosure crisis, whether in New York or other states, one must realize that it is not just the distressed homeowner who suffers. A recent study came out on the effect the foreclosures crisis has on neighborhoods as discussed in Crain's New York Business:

CRAIN'S NEW YORK BUSINESS - Distressed buildings bring down their neighbors

Friday, February 10, 2012

NEW YORK MORTGAGE FORECLOSURE

The big news of course is the $25 billion foreclosure joint federal-state settlement that was announced yesterday. How will affect us? Here is one view:

FORBES - How The $25 Billion Foreclosure Settlement Will Really Affect The Housing Market

Thursday, February 9, 2012

NEW YORK MORTGAGE FORECLOSURE

As I attend another CLE course today at Nassau County Bar Association on trends in mortgage foreclosure, it is interesting to note the following article from yesterday's New York Times(my experience is in Nassau and the description in the article would apply equally there in my view:

NY TIMES - Push to Avert Foreclosures Hits Court Logjam

Tuesday, February 7, 2012

NEW YORK UNEMPLOYMENT INSURANCE - HEARINGS AND APPEALS - MISCONDUCT OR SEPARATION RE: VACATIONS - CASE NO. 8 & 9

Case No. 9 is still in process. There was a hearing, an adverse decision to the claimant,an appeal which remanded the case for a re-hearing, and the new hearing is still pending.

Monday, February 6, 2012

MORTGAGE FORECLOSURE CLINIC FOR HOMEOWNERS

Today I will be at the Nassau County Bar Associateion as a volunteer lawyer for their free "Mortgage Foreclosure Legal Consultation Clinics":

"Nassau residents caught in the growing mortgage foreclosure crisis can have their questions answered by attorneys at a free clinic sponsored by the Nassau County Bar Association at the NCBA headquarters, 15th and West Streets, Mineola, NY. Attorneys have volunteered to provide one-on-one guidance, advice and direction to any Nassau County homeowner who is concerned about foreclosure matters or is already in the foreclosure process involving property in Nassau County.


Attorneys have volunteered to review individual foreclosure issues with Nassau homeowners, help them sort things out, and give advice or refer them to agencies and programs, right in the same room, that may be able to help. This is not legal representation. The attorneys will help the homeowner find out if indeed, they need a credit counselor or a lawyer, and get them in touch with available resources.

In addition to meeting one-on-one with a volunteer attorney, housing counselors, bankruptcy attorneys and representatives from Nassau/Suffolk Law Services -- which provides free legal services for those who meet certain income guidelines -- are on hand to provide assistance.

→ Reservations are required by calling the Bar Association at 516-747-4070. Please bring your mortgage documents. Attorneys fluent in other languages are available upon request when reserving.

All clinics are 3-6 p.m. and are held at the Nassau County Bar Association in Mineola."

Sunday, February 5, 2012

FROM NASSAU COUNTY BAR ASSOCIATION

This was just a nice email I received via LinkedIn:

"Jon Michael Probstein has always been a loyal supporter of the Nassau County Bar Association's pro bono programs, and has performed at the highest professional level at all times. He is invaluable to the success of our programs.

Caryle Katz
Administrator, Community Relations & Public Education
Nassau County Bar Association
Mineola, NY"

Thank you Caryle - it is she who is truly invaluable to the success of the NCBA programs

Friday, February 3, 2012

NEW YORK UNEMPLOYMENT INSURANCE - HEARINGS AND APPEALS - MISCONDUCT OR SEPARATION RE: VACATIONS - CASE NO. 8 & 9

The decision by the ALJ was in favor of the claimant. It was received around two weeks ago. I will not post a redacted copy as I do not know if the employer will be appealing.

Thursday, February 2, 2012

Wednesday, February 1, 2012

NEW YORK UNEMPLOYMENT INSURANCE - HEARINGS AND APPEALS - MISCONDUCT OR SEPARATION RE: VACATIONS - CASE NO. 8 & 9

The hearing lasted almost 2 hours. Testimony was given by the claimant. Testimony was given by the employer by a member of the HR Department; however, that witness had no direct knowledge of the circumstances of the claimant's termination and was not the claimant's direct supervisor (the employer was a large retail chain establishment).