BLANCHARD v. BLANCHARD
S90A1139
Supreme Court of Georgia
DECIDED MARCH 15, 1991.
401 SE2d 714
SMITH, Presiding Justice.
The recommendation of the Review Panel is hereby accepted by this Court. It is therefore ordered that petitioner may be reinstated as a member of the State Bar of Georgia upon his complete compliance with all of the requirements for reinstatement as imposed by the Rules and Regulations of the State Bar of Georgia.
All the Justices concur.
DECIDED MARCH 15, 1991.
William P. Smith III, General Counsel State Bar, Jenny K. Mittelman, Assistant General Counsel State Bar, for State Bar of Georgia.
John A. Chandler, for Hayes.
SMITH, Presiding Justice.
The appellee, Mrs. Blanchard, filed for a divorce, and the appellant, Mr. Blanchard, requested the trial court to award him the federal income tax exemptions,
When we granted the application for discretionary appeal, we were concerned with a question of first impression in Georgia: Whether our state courts have the authority to award the federal income tax dependency exemption,
Article Six of the
only with the meaning and application of a statute enacted by Congress, in the exercise of its plenary power under the Constitution, to tax income. The exertion of that power is not subject to state control. It is the will of Congress which controls, and the expression of its will in legislation, in the absence of language evidencing a different purpose, is to be interpreted so as to give a uniform application to a nationwide scheme of taxation. State law may control only when the federal taxing act, by express language or necessary implication, makes its own operation dependent upon state law. . . . The state law creates legal interests but the federal statute determines when and how they shall be taxed.
All analysis must begin with the statutory language itself. United States v. Wells Fargo Bank, 485 U. S. 351, 355 (108 SC 1179, 99 LE2d 368) (1988). The language used is the best indicator of Congressional intent, and the statutory language of
Nothing within the subsection expressly or impliedly makes the operation of the statute “dependent upon state law.” Burnet, supra at 110. Custodial parents are “entitled to have the statute applied as it was written. . . . Where the words and meaning of a statute . . . are clear, there is no room for judicial consideration of Congressional intent. Gemsco, Inc. v. Walling, 324 U. S. 244, 65 S. Ct. 605, 89 L. Ed. 921 (1944).” United States v. Prudential Ins. Co. of America, 461 F.2d 208, 210 (5th Cir. 1972). “In the exercise of its Constitutional power to lay taxes, Congress may select the subject of taxation, choosing some and omitting others. [Cits.]” Sonzinsky v. United States, 300 U. S. 506, 512 (57 SC 554, 81 LE 772) (1937).
If a state forcibly takes the tax exemption from a custodial parent, with earned income, that parent‘s income becomes subject to unauthorized tax liability. The state would be exerting the power of taxation, and that power “is not subject to state control.” Burnet, supra at 110. It is for that reason and others which follow that we cannot
“[T]ax law is statutory and equitable considerations are inapplicable.” Fears v. United States, 386 FSupp. 1223, 1227 (N.D. Ga. 1975), aff‘d, 518 F2d 1405 (5th Cir. 1975). As further stated in Fears, supra at 1226:
Congress, not the Courts, bears the responsibility for establishing the rules of taxation, and as long as Congress has acted within its constitutional powers, the Courts cannot use broad powers to frustrate specific statutory language. [Cit.]
The specific statutory language should not be frustrated by state courts’ attempts to use equitable powers to tax the income of the custodial parent.
If the purposes of the statute are to provide “certainty” and “ease IRS‘s administrative burden,” Cross, supra at 459, those purposes will be defeated if state courts make federal revenue decisions. There can be no “certainty” or uniformity in taxation in our mobile society, when some state courts force custodial parents to “waive” their federal benefits. The will of Congress, not a state court, determines who is to be taxed. The difference in application among the states will prevent a uniform “nationwide scheme of taxation.” United States v. Wells Fargo Bank, 485 U. S., supra at 355. IRS‘s administrative burdens will be increased as custodial parents challenge the validity of “court-ordered waivers.” See Cross, supra at 459.1 “[T]here is an effective waiver only when it is wholly voluntary and comes . . . without any solicitation or coercion whatsoever from either the state or the court.” Farmer v. State, 128 Ga. App. 416, 417 (196 SE2d 893) (1973). A waiver is a voluntary relinquishment of some known right, benefit, or advantage, which but for the waiver, the party otherwise would have enjoyed. “It cannot be held that there has been a waiver of valuable rights where the circumstances show that what was done was involuntary.” (Citation omitted.) 92 CJS 1054, Waiver.
Custodial parent keeps exemption total taxes paid $2,895.
Non-custodial parent given exemption total taxes paid 2,745.
REDUCTION IN FEDERAL REVENUE $ 150.
Custodial parent‘s tax liability is increased ......... $157.
Federal income tax revenue is decreased ......... 150.
The non-custodial parent receives the sum of the increased liability to the custodial parent and the reduced tax revenue (157+150) ......... $307.
No one disputes that the custodial parent‘s “adjusted gross income is [usually] less than the adjusted gross income of the non-custodial parent.” Nichols id., and that there is a “low level of compliance with alimony and child support awards.” Cross, supra at 459; Nichols, supra at 777. Each day more custodial parents and children fall below the poverty level, crowding welfare rolls, and needy children face serious shortages in government programs because of massive cuts in federal, state, and local budgets.3 In light of these appalling domestic problems it is totally unreasonable for a state court to forcibly increase the custodial parent‘s income tax liability by $157, reduce federal income tax receipts by $150, and provide the non-custodial parent with a tax saving of $307 (the sum of the custodial parent‘s increased liability and the reduced federal tax receipts (157 + 150 = 307)).
Judgment affirmed. Clarke, C. J., Benham, J., and Judge Kenneth Followill concur; Bell, Hunt, and Fletcher, JJ., dissent; Weltner, J., not participating.
FLETCHER, Justice, dissenting.
Prior to its 1984 amendment,
The pre-1984 law resulted in the IRS becoming the unwilling mediator of factual disputes between divorcing parents over the issue of who actually provided more support for the child. Administrative costs incurred in resolving such disputes were relatively high, with the government generally having little tax revenue at stake; consequently,
With certain exceptions not applicable here, the 1984 amendment gives the custodial parent the right to claim the children as dependents, unless the custodial parent signs a written waiver of the dependency exemption. The waiver may be made yearly, in one written instrument covering a period of years, or in perpetuity. In addition, the custodial parent‘s written waiver must be attached to the non-custodial parent‘s federal income tax return in order to entitle the non-custodial parent to the exemption.
Since the 1984 amendment, 19 of the 27 states that have addressed the question presented here have definitively recognized that state trial courts have the authority to allocate the exemption. One other state has reached the same basic result, while only seven states, in reliance upon the doctrine of federal preemption, have held to the contrary.
The 1984 amendment, unlike the pre-1984 law, does not make express provision for an award of the dependency exemption by court decree. However, the undisputed purpose of the 1984 amendment demonstrates that Congress is indifferent to the question of which parent claims the exemption so long as the IRS does not have to expend its resources in making the decision.
What the new Code section sought to achieve was certainty in the allocation of the dependency exemption for federal tax administration purposes. By placing the dependency exemption in the custodial parent unless a waiver is executed, the new statute relieves the Internal Revenue Service of litigation. The new statute is entirely silent concerning whether a domestic court can require a custodial parent to execute a waiver, and this silence demonstrates Congress‘s surpassing indifference to how the exemption is allocated as long as the IRS doesn‘t have to do the allocating.
(Emphasis in original.) Cross, 363 SE2d at 457. Thus, a state court‘s allocation of the dependency exemption to a non-custodial parent does not conflict with any federal tax policy and has not been preempted by any federal tax law. Consequently, neither the Internal Revenue Code nor general principles of federal law, see Cross, 363 SE2d at 458-459, n. 19, prohibit a state court‘s award of the exemption.
[W]hat the Davis court missed is that there is no prohibition — express or implied — on a state court‘s requiring the
(Emphasis in original.) Id. at 458.
Because Congress is wholly indifferent to how the exemption is allocated, I would hold that superior courts in Georgia, which act as courts of equity, do have the discretion to allocate the dependency exemption and do have the authority to order the custodial parent to execute a waiver of that exemption in order to enforce the allocation.
A court does not have the authority to grant a taxpayer an exemption or deduction; such is a matter solely for determination by the legislative branch. However, in the situation presented here, the court would not be granting an exemption; the exemption was granted by Congress. The court would merely be allocating that exemption between the custodial and non-custodial parents as a part of the court‘s determination of the obligations of the parties to the divorce action.
Contrary to the conclusion of the majority, permitting state courts to exercise their discretion regarding allocation of the dependency exemption is not an imposition of a tax by the courts and does not subject the custodial parent‘s income to unauthorized tax liability. We would merely be recognizing that state courts have the same discretion they had prior to the 1984 amendment: the discretion to allocate the dependency exemption. Allocation of that exemption is not the imposition of a tax.
I would also note that the majority‘s holding will not simplify the trial of divorce actions where child support is an issue because the adverse impact upon the non-custodial parent‘s ability to pay child support, resulting from the dependency exemption remaining with the custodial parent, will, in all likelihood, give rise to a claim for the downward modification of child support.
For the foregoing reasons, I dissent. I am authorized to state that Justice Bell and Justice Hunt join in this dissent.
DECIDED MARCH 15, 1991.
Surrett, Walker, Creson & Colley, Carl J. Surrett, for appellant.
Fleming, Blanchard & Bonner, M. Kay Jackson, for appellee.
Dye, Miller, Tucker & Everitt, John B. Long, Benjamin H. Brewton, amicus curiae.