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BOE Member George Runner

Bill Allowing Tax Agency to Honor Divorce Agreements Advances

Legislation that I’m sponsoring with Board of Equalization Member Fiona Ma advanced in the Senate Governance and Finance Committee today. SB 526 (Fuller) would give 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.

If two parties reach a court-approved agreement that they believe has fairly divided assets and debts, then a tax agency should respect that agreement. Telling taxpayers that they must go back to court in order to enforce a divorce agreement is inefficient government. This must be changed.

Most of the income tax appeals to reach the Board of Equalization that include a divorce settlement agreement involve women who believe they were protected from tax liability, but discover their only recourse to enforce the agreement is to go back to court or pay the tax.

SB 526 will assist in easing the financial burden of divorced women who should have no legal obligation to pay the tax, as stipulated by their divorce agreement.

Here’s what Senate Republican Leader-Elect Jean Fuller had to say:

“Divorce can be difficult enough without the addition of more court filings and paperwork to work out a tax liability decision already agreed upon by both parties.

“SB 526 will provide the FTB with the flexibility to consider the divorce agreement when making a liability ruling therefor reducing the need for additional expenses to the impacted party.”