Mother Bound by Child Tax Exemption Release Regardless of Father’s Child Support Arrears

Gavel A mother’s attempt to claim a tax exemption for her youngest child failed due to the mother’s having signed, as part of a divorce settlement, a release waiving her right to take the exemption. The father’s alleged failure to pay child support was irrelevant to the tax issue, because the mother’s releases were unconditional and voluntary.

Rachel George and Johnson John married in 1988. The couple had two daughters, and divorced in 1995. Subsequently, the court permitted John to claim the couple’s youngest daughter as a dependent on his taxes starting in 1996, as long as he remained current on his child support payments. George signed a Form 8332 (“Release of Claim to Exemption for Child of Divorced or Separated Parents”) regarding the younger child for 1996. In 2007, John sought a court requiring George release any tax exemption claims to the younger daughter for 1997 to 2010. Although John was allegedly not current on his child support, the court entered the order, and George, under threat of contempt, signed the releases.

In 2007 and 2008, each of John and George claimed dependency exemption deductions for the younger daughter. George also claimed a child tax credit for the daughter. John attached George’s 8332 forms to his return. The IRS issued a notice of deficiency for both years.

In George v. Commissioner, the mother argued that the U.S. Tax Court should void the forms. George contended that the threat of a contempt citation from the state court placed under duress, and her decision to sign was not voluntary. The Tax Court, however, ruled “[d]uress occurs when ‘an unlawful act’ induces action… but it was Virginia law that required Ms. George” to sign. “Every person is always legally bound to comply with the law–but is not thereby under duress,” the court wrote.

The court also rejected the mother’s argument that the Tax Court should invalidate the releases based upon the state court’s failure to factor in John’s child support arrears before ordering George to sign the releases. The court explained that it lacked such authority. If the trial court erred, George’s recourse laid with the state appellate system, not the Tax Court. “[T]his Court does not sit as a court of appeals to correct the errors of State family courts,” the Tax Court explained. Finally, the court was unmoved by George’s argument that John should not reap the tax benefits of the divorce agreement when he shirked his responsibilities under that agreement (to pay child support.) While noting this argument’s “visceral appeal,” John’s non-payment was irrelevant. George signed the release form, granting an unconditional release, and John’s child support payments, or lack thereof, “does not affect the validity of her Form 8332 under [26 USC] 152(e) once the form was executed.”

The tax attorneys at Samuel C. Berger, P.C. and the CPAs at S.C. Berger, P.C. can help people throughout New York and northern New Jersey with all manner of tax issues, including the often complicated world of income taxes for divorced parents with dependent children. To consult our attorneys and CPAs, contact us online or call (201) 587-1500 or (212) 380-8117.

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