The Internal Revenue Service filed a finalized version of the temporary regulations pertaining to the Right of Divorced or Separated Parents to Claim a Child as a Dependent (T.D. 9408). Since 2005, the regulations have been changed to remove ambiguity in state divorce decrees. When a decree allows a noncustodial parent to claim a dependency exemption, the IRS unambiguously requires Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.
The temporary rules have been applied with mathematical precision to U.S. Tax Court cases as early as 2001. Under the temporary and now final regulations, 1) custodial parents must sign and 2) noncustodial parents must submit Form 8332 in order to claim the child dependency exemption. The regulation was adopted to help remove the IRS from deciding factors that are properly within a state court’s jurisdiction.
Although the new rules provide clarity, and–in my opinion, a rationale for shared parenting and joint custody legislation–untold numbers of noncustodial parents have already been snared by the new rules. In each of these cases, the taxes and penalties amounted to less than $10,000 often not exceeding $3,000 per year. The IRS is not going after big fish in this operation. They are trying to extricate themselves from matters that properly belong in state courts and between the mother and father of every child.
In nearly every instance in which a noncustodial parent has taken this matter to the U.S. Tax Court, the separating documents require the custodial parent, conditionally or unconditionally, to release the claim to exemption for the child on the required IRS Form 8332 or a substitute. Yet, not one state has had any penalty when a parent refuses to comply with this particular provision of the court order.
The burden on the states, now, is to enact penalties for custodial parents who do not sign the forms when a divorce or child custody decree requires such.
In contrast, many separation agreements settled outside of Family Courts around the country, leave out this important provision worth several thousand dollars per year for the mother and father of each child. This is not a small oversight, but should be a point of malpractice by mediators, lawyers and others who seek to create an amicable resolution between the parties for the benefit of the children.
In this regulation, the IRS has created rules upon which parents may amicably, under almost every circumstance, determine who gets to claim the dependency exemption for each child on their annual personal income tax returns. Next, I will examine how their equitable rule actually supports shared parenting and joint custody.
For now, let us share the pain with these noncustodial parents (and many others who have not had the fortitude to take the matter into the U.S. Tax Court):
Cheryl J. Miller, 03/24/2000, TY ????, $???, Colorado
Zachary S. and Lisa C. Curello, 02/24/05, TY 2001, $1,398, Connecticut
W.D. Mace v. Commissioner, 07/15/05, TY 2001, $1,397, Kentucky
David B. and Sharon J. D’Amours, 02/16/06, TY 2002, $3,630, Massachusetts
Gary Lyle Gibson and Mirian Julia Alves, 09/11/06, TY 2003, $3,468, Florida
Nathan Andrew Poehlein, 01/03/07, TY 2002, $4,600, Kentucky
Robert H. Martin v. Commissioner, 03/26/07, TY 2003, $5,485, Virginia
Lawrence L. and Pamela J. Crane, 06/25/07, TY 2002, $1,410, Missouri
Sean Michael Bears and Greta Bears, 09/05/07, TY 2004, $1,465, Massachusetts
James J. Spuches, 09/12/07, TY 2003, $1,458, New York
Neil J. Norman, 09/25/07, TY 2003, $2,125, Montana
Shawn A. Finnegan, 10/22/07, TY 2003, $1,363, Wisconsin
Richard G. Keene, 11/1/07, TY 2004, $3,550, Wisconsin
Paul Marcillese Shelton and Felicia Laverne Graham, 12/17/07, TY 2003, $4,230, Maryland
Michael Artayet, 4/7/08, TY 2004, $1,717, Virginia
William N. Ward, 05/19/08, TY 2004, $2,426, Virginia
Glen Godby, 06/17/08, TY 2003, $4,204, West Virginia
Alberto Campos, 06/24/08, TY 2003, $3,773, Texas
Robert M. Daniels, 06/24/08, TY 2005, $4,325, Texas
Joseph D. and Rebecca K. Lease, 06/24/08, TY 2005, $3,303, Iowa
July 26, 2008 at 8:17 pm |
I believe that this instinct to perpetuate useless work is, at bottom, simply a fear of the mob. The mob the thought runs are such low animals that they would be dangerous if they had leisure; it is safer to keep them too busy to think.GeorgeOrwellGeorge Orwell, Down and Out in Paris and London
July 27, 2008 at 6:11 pm |
A bookstore is one of the only pieces of evidence we have that people are still thinking.JerrySeinfeldJerry Seinfeld