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"