SB 306 - TAX EXEMPTIONS IN CHILD SUPPORT CASES SENATOR DAVE DONLEY, sponsor of SB 306, described the situation SB 306 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 306 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.