California Tax Agency Closer to Honoring Divorce Agreements?
Sacramento - Legislation sponsored by Board of Equalization members George Runner and Fiona Ma met the crucial house of origin deadline when the State Senate voted unanimously to approve SB 526.
SB 526, authored by Senators Jean Fuller and Sharon Runner, gives the Franchise Tax Board authority to honor legal divorce agreements regarding payment of taxes when determining if one spouse can be relieved of a joint tax liability.
The house of origin deadline is the last day to pass bills out of the house where they were introduced. The deadline falls on June 5 this year.
"This has been a bipartisan effort to create a more efficient government," said Runner. "Telling taxpayers that they must go back to court in order to enforce a divorce agreement is cumbersome and unfair. I'm pleased the Senate recognized that."
Currently, tax appeals come before the Board of Equalization from people who believe they were protected from tax liability by their divorce agreement. Most cases involve women who discover their only recourse to enforce the agreement is to go back to court or pay the tax. Unfortunately, the Franchise Tax Board does not have the legal flexibility to recognize court-approved divorce agreements.
"I'm proud to support this bill that will help provide relief for a spouse who believed in good faith that their tax liabilities had been settled through the divorce proceedings," said Ma. "When you consider the history of some of these cases involving domestic violence or other traumatic events that led to the dissolution of a marriage, we should not be adding to this burden as spouses try to put their lives together."
SB 526 will help ease the financial burden of divorced women who have no legal obligation to pay the tax, as stipulated by their divorce agreement. The bill now moves to the State Assembly.