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

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