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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Dodge v. Sturdevant (10/10/2014) sp-6958

Dodge v. Sturdevant (10/10/2014) sp-6958

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

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KARLEE A. DODGE, f/k/a                                      )  

Karlee A. Sturdevant,                                       )    Supreme Court No. S-15212  


                            Appellant,                      )    Superior Court No. 4FA-11-02089 CI  


         v.                                                 )    O P I N I O N  


FRANK W. STURDEVANT III,                                    )    No. 6958 - October 10, 2014  


                            Appellee.                       )  


                   Appeal  from  the  Superior  Court  of  the  State  of  Alaska,  

                   Fourth Judicial District, Fairbanks, Bethany Harbison, Judge.  

                   Appearances:           Craig   B.  Partyka,  Cook   Schuhmann   &  


                   Groseclose,   Inc.,   Fairbanks,   for   Appellant.      Margaret  

                   O'Toole  Rogers,  Foster  &  Rogers,  LLC,  Fairbanks,  for  


                   Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                   Bolger, Justices.  

                   WINFREE, Justice.  


                   The superior court ordered that divorced parents each claim one of their two  

children  for  the  federal  income  tax  dependency  exemption.    Both  children  resided  

primarily with the mother, and  the  court ordered her to sign and file a federal form  


waiving her exemption for one child.  The mother appeals, arguing the superior court  


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lacked authority to order her to sign the waiver form.  We adopt the majority view that  


a custodial parent may be ordered to sign the waiver form, and affirm the court's order.  


                   Karlee  Dodge  and  Frank  Sturdevant  entered  into  a  partial  settlement  


agreement as part of their divorce proceeding.  The agreement provided that they would  


share legal custody of their two children, but that Dodge would have primary physical  


custody.  The superior court then held a trial to determine several unresolved financial  


issues, including who would claim the children as dependents for federal income tax  



                   The superior court issued an order for Dodge and Sturdevant each to claim  


one child for the federal income tax dependency exemption.  The court made clear that  


"[t]he  parties,  specifically  [Dodge],  are  required  to  comply  with  all  IRS  rules  and  

regulations necessary to implement this Order.  Specifically, [Dodge] is required to  


complete and sign IRS Form 8332 annually."  Dodge filed a motion to stay the superior  


court's order, arguing that the order "is contrary to, and inconsistent with, federal law"  


because her signature on Form 8332 would not be voluntary.  The court denied Dodge's  


                   Dodge appeals the order requiring her to sign Form 8332.  


                   Whether the superior court has authority to order a parent to sign Form  


                                             We  review  questions  of  law  de  novo,  applying  our  

8332  is  a  question  of  law.                                                                           

          1        See State, Dep't of Revenue v. Deleon, 103 P.3d 897, 898 (Alaska 2004)  


(reviewing de novo whether superior court had authority to order party to apply for  

permanent fund dividend).  

                                                             -2-                                                          6958  

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independent judgment and adopting the rule of law most persuasive in light of precedent,  

reason, and policy.2  


         A.        Brief Statutory And Regulatory Background.  

                   The federal tax code creates a dependent exemption3 

                                                                                           and a special rule for  


                                                                                                 The current code  

divorced parents concerning which parent may claim the exemption. 

provides that a parent who has custody of a child for more than half the year is entitled  



to the dependent exemption.   But the custodial parent may waive the exemption by  

         2        State  v.  Schmidt,  323  P.3d  647,  655  (Alaska  2014)  (quoting  State  v.  

Anthony , 810 P.2d 155, 156-57 (Alaska 1991)).  

         3         26 U.S.C.  151(c) (2012).  

         4         26 U.S.C.  152(e).  

         5        Id.   The current version of  152 was enacted in 1984 and amended in 2004  

and 2005.  Gulf Opportunity Zone Act of 2005, Pub. L. No. 109-135,  404(a), 119 Stat.  

2577, 2633-34 (codified as amended at 26 U.S.C.  152(e)); Working Families Tax  


Relief Act of 2004, Pub. L. No. 108-311,  201, 118 Stat. 1166, 1172-73; Tax Reform  

Act of 1984, Pub. L. No. 98-369,  423, 98 Stat. 494, 799-800.  Before the current  


version took effect on January 1, 1985, the tax code allowed state courts to allocate a  

dependent  exemption  through  a  divorce  decree;  the  1984  revision  removed  this  


discretion and instead provided the exemption to the custodial parent unless the custodial  

parent signed a waiver.   See Monterey Cnty. v. Cornejo,  812 P.2d 586, 588-89 (Cal.  


 1991);  Cross  v.  Cross,  363  S.E.2d  449,  458  (W.  Va.  1987).    The  short-lived  2004  

amendment again allowed state courts to effectuate a dependent exemption allocation in  

a divorce decree.  See Working Families Tax Relief Act of 2004  201.  But the 2005  


amendment again eliminated state courts' authority to use divorce decrees to effectuate  

the  exemption  allocation,  requiring  the  use  of  a  waiver  form  instead.    See  Gulf  


Opportunity Zone Act of 2005  404(a).  

                  Although both parties discuss Ginn-Williams v. Williams, that case involved  

the 2004 version of  152(e) and is inapplicable to the present legal question.  See 143  

P.3d 949, 955 n.11 (Alaska 2006).  

                                                          -3-                                                   6958

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signing a written declaration, which then must be attached to the non-custodial parent's     


tax return for the non-custodial parent to receive the exemption.                                         Federal regulations  

require that the custodial parent waiving the exemption complete IRS Form 8332 (or a  


similar declaration), declaring that the custodial parent will not claim the exemption and  


naming the non-custodial parent to whom the exemption is released.7   The IRS will not  


provide the exemption to a non-custodial parent unless Form 8332 is submitted or one  

of the narrow exceptions, not relevant here, is met.8  

           B.	       Form  8332  And  The  Associated  Code  And  Regulations  Do  Not  

                     Explicitly Bar Court-Ordered Signatures On Form 8332.  

                     Dodge argues that Form 8332's language creates a requirement that the  


custodial parent's signature on that form be made voluntarily.  Form 8332 requires the  


custodial  parent  to  "agree  not  to  claim  an  exemption"  and  provides  the  option  of  


revoking the waiver.  But nothing in the text of Form 8332, the tax code, or the federal  

regulations explicitly requires that a signature be purely voluntary.  The United States  

Tax Court has held to the contrary.  In George v. Commissioner, a Virginia trial court  


had ordered a custodial parent to sign Form 8332.   The parent signed the form and did  


not receive the exemption, but then argued that the IRS should disregard the waiver  


because "the threat of judicial contempt if she did not comply and sign" constituted  

           6         26 U.S.C.  152(e)(2).  

           7         Treas. Reg.  1.152-4(e) (2014).  

           8         See Treas. Reg.  1.152-4(a), (b)(3)(ii).  

           9          139 T.C. 508, 511 (2012).  

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"duress."         The tax court rejected that argument, concluding that a state court order to   

sign Form 8332 did not constitute duress and therefore the parent's form was valid.11  

                    Although the IRS has not issued an opinion resolving this question, an  


example in the IRS regulations directly supports the conclusion that federal law permits  

court-ordered signatures on Form 8332.  The example states:  

                    W and X are the divorced parents of Child.  In 2009, Child  


                    resides solely with W.  The divorce decree requires X to pay  


                    child support to W and requires W to execute a Form 8332  

                    releasing W's right to claim Child as a dependent.  W fails to  

                    sign a Form 8332 for 2009, and X attaches an unsigned Form  


                    8332 to X's return for 2009.  

The example shows that the divorce decree, coupled with submission of an unsigned  



Form 8332, is insufficient to allocate the right to claim the dependent exemption. 


the example clarifies that if W had signed Form 8332 pursuant to the divorce decree, the  


                                                                                                         The validity of a  

waiver would be valid and X would be entitled to the exemption. 

court-ordered signature is further supported by Sanchez v. Commissioner, where the  


United States Tax Court addressed the situation suggested in the regulation example and  


stated:  "If [a] former spouse refused to sign and provide the required Form 8332 in time  


for [petitioner] to file his 2006 federal income tax return, petitioner's recourse was to the  

          10        Id. at 515.

          11        Id.

       Treas. Reg.  1.152-4(g) Example 18.  

          13        Id.  

          14        Id.  

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state courts to have them enforce the Texas state court order."                                     The court's express  


contemplation of a court-ordered signature on Form 8332 indicates that nothing in the  

associated code or regulations renders such a signature invalid.  


          C.	       The Majority Rule Allows Trial Courts To Order A Party To Sign  

                    Form 8332.  


                                                                                                                 the majority  

                    Although Dodge is correct that some states hold otherwise, 


                                                                                                              The California  

rule is to allow trial courts to order custodial parents to sign Form 8332. 


Supreme  Court  case  Monterey  County  v.  Cornejo  provides  a  straightforward  and  

compelling rationale for the majority rule.18  

          15	       T.C. Summ. Op. 2009-167, at *2 n.2 (Nov. 12, 2009).  

          16	       See Blanchard v. Blanchard, 401 S.E.2d 714, 715-17 (Ga. 1991); Brandriet  

v. Larsen , 442 N.W.2d 455, 457-60 (S.D. 1989).  

          17        Monterey Cnty. v. Cornejo , 812 P.2d 586, 589 (Cal. 1991) (collecting cases         

and stating, "Since the amendment to section 152(e), the vast majority of jurisdictions   

considering  the  issue  have  concluded  that   state  courts  retain  jurisdiction  to  allocate  

dependency exemptions to noncustodial parents."); Harris v. Harris , 760 So. 2d 152,  

153 (Fla. Dist. App. 2000) ("The majority view nationwide now  holds  that the Tax  


Reform Act does not prohibit state courts from ordering the custodial parent to execute  


[Form 8332]."); see, e.g., Fleck v. Fleck , 427 N.W.2d 355, 359 (N.D. 1988) ("[W]e  

believe the trial court has authority to order the custodial parent to execute consent forms  


assigning the income tax dependency exemption to the non-custodial parent . . . .");  

Cross  v.  Cross,  363  S.E.2d  449,  458  (W.  Va.  1987)  ("Indeed,  under  the  new  IRC  


 152(e) a state court does not have the power to allocate the exemption simply by court  


order alone (as it could have done before the 1984 Amendment), but it does have the  


equitable power to require the custodial parent to sign the waiver.").  

          18        812  P.2d  at  588-92.    The  version  of    152(e)  applied  in  that  case  was  

identical in all relevant aspects to the current version.   Compare 26 U.S.C.  152(e)  

(1988), with 26 U.S.C.  152(e) (2012).  

                                                               -6-	                                                        6958

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                    In that case a trial court allocated the dependent exemption to the non- 



custodial parent and noted that the custodial parent would have to sign the waiver. 

county (on behalf of the custodial parent) appealed, arguing that the trial court had no  


                                                                            But the California Supreme Court  

authority to allocate the federal tax  exemption. 


concluded that the trial court had authority to allocate the exemption and to order the  


custodial parent to sign the required waiver form.                             


                    The  court  articulated  three  reasons  for  its  decision.    First,  the  court  

determined that nothing in the plain language of the tax code or federal regulations  

prohibited  state  courts  from  ordering  a  custodial  parent  to  sign  the  waiver,  so  the  


equitable  power  of  state  courts  to  order  the  waiver  would  not  interfere  with  any  


                                                                        The court explained that the legislative  

congressional purpose in providing the waiver. 


history of the 1984 amendments demonstrated that the new  152(e) was enacted to  

"  'enhance  the  administrative  convenience  of  the  IRS,'  "  and  state  courts  therefore  

retained their traditional power of allocating the exemption.23  

          19        Monterey Cnty. , 812 P.2d at 588, 592 n.7.  

          20        Id. at 588.  

          21        Id. at 592; see also id. at 590 ("[S]tate trial courts retain the authority to   

allocate  the  dependency  exemption  by  ordering  the  custodial  parent  to  execute  the  

necessary waiver.").  The court remanded for "the trial court to make clear that [the  


custodial parent] is to execute the requisite declaration in consideration of the increased  


child support she will be receiving." Id. at 592.  

          22        Id.  at  590  ("  'The  new  statute  is  entirely  silent  concerning  whether  a  


domestic court can require a custodial parent to execute a waiver . . . .' " (emphasis in  

original) (quoting Cross, 363 S.E.2d at 457)).  



                    Id.  at  589-90  (quoting  Motes  v.  Motes ,  786  P.2d  232,  237  (Utah  App.


1989)); see also Fullmer v. Fullmer , 761 P.2d 942, 950 (Utah App. 1988) ("The purpose


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                    Second, the court observed that trial courts have the equitable power to  

adjust awards of child support and alimony in the same amount as the non-custodial  


                                                                     Thus, the practical effects of ordering the  

parent would receive through the exemption. 


custodial parent to sign the waiver or adjusting the non-custodial parent's child support  


are economically equivalent.                    The court concluded there is no real justification for  

"  'forc[ing]  state  courts  to  achieve  financial  parity  [in  a  divorce]  indirectly,  by  


downwardly  adjusting  otherwise appropriate  alimony  and  child  support, rather  than  


achieving parity directly, by sensibly allocating the exemptions.' "                                    

                    Third, the court acknowledged the possible economic benefits to the family  


as a whole if a trial court may award the exemption to the non-custodial parent:  "[T]he  


effect of awarding the exemption to the noncustodial parent [in a higher income tax  


bracket than the custodial parent] is to increase the after-tax spendable income of the  

          23        (...continued)  

of the 1984 amendments was both to remove the Internal Revenue Service from time  


consuming factual disputes over which parent met the threshold support requirements,  


and to add certainty to the process . . . ."); H.R. Rep. No. 98-432, at 1498-99 (1984),  

reprinted in 1984 U.S.C.C.A.N. 697, 1140 ("The present rules governing the allocations  


of the dependency exemption are often subjective and present difficult problems of proof  


and substantiation.  The Internal Revenue Service becomes involved in many disputes  


between parents who both claim the dependency exemption based on providing support  


over the applicable thresholds.  The cost to the parties and the Government to resolve  

these disputes is relatively high and the Government generally has little tax revenue at  


stake in the outcome.  The committee wishes to provide more certainty by allowing the  


custodial spouse the exemption unless that spouse waives his or her right to claim the  

exemption.  Thus, dependency disputes between parents will be resolved without the  


involvement of the Internal Revenue Service.").  

          24        Monterey Cnty. , 812 P.2d at 591.  

          25        Id.  

          26        Id. (quoting Motes , 786 P.2d at 239).  

                                                              -8-                                                        6958

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family as a whole, which may then be channeled into child support or other payments."                                          27  

Denying state courts the authority to allocate the exemption " 'would only maximize the  

federal taxes to be paid to the detriment of the parents and the children.' "28  


                    The court concluded that California trial courts retained "their traditional  


equitable power to allocate the dependency exemption to the noncustodial parent by  

ordering the custodial parent to execute a declaration waiving the exemption."29  

          D.        The Superior Court Can Order A Signature On Form 8332.  

                    We conclude as a matter of law that a superior court has the authority to  


order a custodial parent to sign Form 8332 and give the dependent exemption to the non- 


custodial  parent.    Nothing  in  Form  8332  or  the  associated  tax  code  and  federal  


regulations specifically prohibits state courts from ordering the custodial parent to sign  

Form 8332, and the majority approach exemplified by Monterey County presents the  


better legal analysis and policy rationale.  We adopt the majority rule and hold that the  


superior court acted within its authority when it ordered Dodge to sign Form 8332 and  

allocated the dependent exemption to Sturdevant.  

V.        CONCLUSION  

                    We AFFIRM the superior court's order.  

          27        Id. at 592.  

          28        Id. (quoting Nichols v. Tedder , 547 So. 2d 766, 774 (Miss. 1989)).  

          29        Id.  

                                                              -9-                                                            6958  

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