781.708.4445

wmlevine@levinedisputeresolution.com

Divorce Mediation Blog

GOP Plan to End Alimony Deductibility: Time to reform the Alimony Reform Act?

Monday, November 20, 2017

Levine Dispute Resolution - Alimony

The House GOP seems to think that repealing §215 of the Internal Revenue Code is a good idea. We have long believed that there are probably too many alimony-paying lawyers in Congress to let this day ever come. It probably won’t, but if it does, it will plunge the Alimony Reform Act (ARA) (eff. 3.1.12) into crisis. Either way, the legislature needs to respond.

M.G.L., ch. 208, §48 defines “alimony” as: “the payment of support from a spouse, who has the ability to pay, to a spouse in need of support for a reasonable length of time, under a court order”. Nothing about tax impact. The drafters, like us, clearly took deductibility under federal and state law for granted.

Moreover, M.G.L., ch. 208, §53(b) defines a “reasonable and lawful” presumptive formulation for general term alimony, stating the general term alimony should generally not exceed the recipient needs, or 30-35% of the difference between the parties’ applicable gross incomes.

This statutory range makes the same once-safe assumption: that IRC §215 allows parties to leverage dollars to the family’s benefit, by shifting income tax from a higher progressive tax rate of the payor, to the payee’s lower rate.

If the alimony deduction dies, it will take the viability of §53(b) along with it. Yet, the zombie statute will persist, entitling litigants to rely on it, despite its infirmity; unless and until the state legislature takes corrective action. This will not happen overnight – these things never do – and in the meantime… Sophisticated divorce agreements have “savings” clauses, which help people adjust alimony sums in the unlikely event of a deductibility repeal, and the GOP plan grandparents existing judgments, at least until modification. But modification cases and new divorces won’t get off so easy.

Maybe, the legislature should take the GOP proposal as a warning shot, at least. The legislature could act pre-emptively. Sections 48 and 53(b) at least need reformulation, regardless of Congress’ ultimate action. We should convert the assumption of the tax-shifting leverage of continued deductibility for alimony into a clear predicate for the ARA, with provisions to address the alternative.

And, if the unthinkable happens, it’s better get started now.



Get e-mail notifications of new blog posts! Enter email address below.:



Delivered by FeedBurner

other articles


recent posts


tags

facilitated negotiations arbitrator conciliation The Seven Sins of Alimony self-adjusting alimony how baseball arbitration works Massachusetts alimony General term alimony arbitration health insurance Massachusetts Alimony Reform Act separation family law arbitrator Defense of Marriage Act Uniform Arbitration Act fraud divorce lawyers pre-ARA alimony Massachusetts divorce mediators mediator support orders Chouteau Levine Obamacare family law Matrimonial Arbitration family mediation mediations divorce mediation alimony statute Child Support Guidelines Divorce lawyer disputes divorce arbitrator mediation Massachusetts lawyers resolve disputes Massachusetts alimony and child support alimony reform legislation divorce agreement health coverage divorce mediator Alimony Reform Act arbitrators mediators alimony orders divorce litigation divorce judgment special master Act Reforming Alimony in the Commonwealth IRC §2704 family law mediation divorced Boston Massachusetts lawyer-attended mediation Baseball Arbitration family and probate law disputes private dispute resolution divorce mediators divorce and family law mediators divorce and family law Massachusetts divorce lawyers rehabilitative alimony Divorce Agreements Baseball Players Major League Baseball Arbitration Levine Dispute Resolution Center child support Family Law Arbitration divorce mediations dispute resolution medical benefits med-arb LDRC divorce arbitrators med/arb Levine Dispute Resolution Center LLC lawyers Levine Dispute Resolutions annulment divorce arbitration MLB labor agreement alimony law COLA high-risk methodology Massachusetts Lawyers Weekly SJC Cohabitation DOMA alimony Levine Dispute Resolution litigation divorce process Same Sex Marriage Baseball family law arbitrators family support traditional negotiations Self-adjusting alimony orders