02/25/1998 09:08 AM Senate HES

         SB 306 - TAX EXEMPTIONS IN CHILD SUPPORT CASES                        
                                                                               
SENATOR DAVE DONLEY, sponsor of SB 306, described the situation SB
 addresses.  If a non-custodial parent is awarded the ability to            
claim a child as a tax deduction and then fails to make child                  
support payments, that parent continues to get the tax deduction               
because the IRS is unable to refute tax deductions established by              
court order.  SB 306 will prevent the non-custodial parent from                
claiming the child as a tax deduction if that parent does not pay              
child support.                                                                 
                                                                               
BARBARA MIKLOS, Director of the Child Support Enforcement Division             
(CSED),  informed committee members she was available to answer any            
questions.  She stated CSED will have a role in this matter if SB
 passes, which CSED can fulfill.                                            
                                                                               
SENATOR WARD asked how many people this bill will affect.  SENATOR             
DONLEY replied quite a few people will be affected.  Three                     
constituents called him in January about this situation.  He noted             
this bill is proactive because the Legislature cannot pass                     
legislation that will affect court orders issued in the past, so it            
will not help those people who called.                                         
                                                                               
Number 267                                                                     
                                                                               
CHAIRMAN WILKEN asked Ms. Miklos if she knew how many people SB 306            
will affect.  MS. MIKLOS said CSED was not able to come up with a              
firm number.                                                                   
                                                                               
SENATOR GREEN asked if there is any other way to change a court                
order.  SENATOR DONLEY explained a person has to hire an attorney              
and go back to court to amend the original child support order to              
redirect the tax exemption to the custodial parent.  Attorney fees             
for such an action might cost $3,000 to $4,000.                                
                                                                               
SENATOR GREEN asked how Senator Donley arrived at the four month               
arrearage requirement.  SENATOR DONLEY replied he paralleled the               
existing statute regarding licensure revocation.                               
                                                                               
SENATOR GREEN thought one would have to have a minimum of six                  
months of nonpayment because that would equal less than one-half of            
a year of child support.                                                       
                                                                               
SENATOR DONLEY explained under the existing statutory scheme, if               
one does not pay for four months, the person has the opportunity to            
negotiate a scheduled payment plan.  If the person then fails to               
make payments under the scheduled plan for four months, this                   
provision would go into effect.  Essentially, a person could be in             
arrears for eight months.  He added it is not economically                     
reasonable for the custodial parent to go to court for a deduction             
because it costs more than the deduction is worth.                             
                                                                               
SENATOR GREEN did not think that argument holds up.  She questioned            
whether the bill goes far enough and whether the ability to                    
renegotiate should hold for other provisions.                                  
                                                                               
SENATOR WARD moved to report SB 306 out of committee with                      
individual recommendations and its accompanying fiscal notes.                  
There being no objection, the motion carried.