Is IRS debt considered in the spousal support equation?

Recently, we came across a question posed to an out-of-state attorney regarding the ability to pay spousal support. The question posed a very interesting issue that is not always considered immediately in the discussion of the ability to pay spousal support resulting from a Dissolution of Marriage.

The question: I owe the IRS a large sum of money, the ex-spouse is requesting spousal support in an amount that will leave me penniless. Will the Court adjust the amount of spousal support down if I can show that my monthly IRS obligation combined with spousal support will make it impossible for me to pay even the most basic of bills?

There are two (2) types of spousal support – a temporary amount, and a “permanent amount”.

Temporary Spousal Support: Generally, the Court has the broad power to award a temporary amount based on the requesting party’s need and the other party’s ability to pay. This comes from California Family Code, Section 3600, and is supported by appellate case law in Marriage of Witgrove and Marriage of Dick. A temporary order is open to the sound discretion of the Court based on the circumstances of the parties. In fact, other appellate case law provides that the Court may consider the “big picture” concerning the parties’ assets, and income available for support in light of the marital standard of living. (Marriage of Lim & Carrasco.) The purpose of temporary spousal support is try to maintain the parties’ living conditions and the standards in a “status quo” position. However, the Court has broad discretion in ordering spousal support, especially considering the tax debt. If the tax debt is a community property debt, the Court can order that temporary spousal support be discharged in part by the payment of “key debts”, as stated in the case Marriage of Hebbring and Marriage of Green.

The “Permanent” Spousal Support: (Not to be misleading….the “permanent amount” is not permanent as to time, it’s just called that to differentiate from temporary.) On the other hand, a “permanent” award for spousal support is for financial assistance as determined by the parties’ circumstances at the end of the dissolution process and the division of assets. In determining a permanent order for spousal support, the Court must consider ALL the mandatory statutory factors of California Family Code §4320. Of those factors, those relevant to this question are:

Ability of supporting party to pay spousal support, considering the supporting party’s earning capacity, earned and unearned income, assets, and standard of living;

The needs of each party based on the standard of living established during the marriage;

The obligations and assets, including the separate property, of each party;
The immediate and specific tax consequences to each party;
The balance of the hardships to each party; and
Any other factors the court determines are just and equitable.

The Court is bound to consider and weigh the Section 4320 factors, but the ultimate decision as to amount and duration rests with the Court’s broad discretion, as detailed in the case of Marriage of Smith, which assists the Court in reaching the “substantial justice for the parties.” Each case presents different circumstances that which the Court must consider. Thus, there is no statutory purpose for the grand scheme of spousal support that applies to every case, which is different from Guideline Child Support. Spousal support orders are to be tailored to each individual case.

Thus, and argument can be made about the factors regarding the balance of the hardships to each party and any other factors the court determines are just and equitable. The debt owed to the IRS is generally not one that can be discharged in bankruptcy and is a debt that the IRS can garnish a person’s wages to collect. The Court would certainly take into consideration the fact that the potential payor of spousal support owes a large amount of tax liability to the IRS.

John Cannon is a Certified Family Law Specialist and is the senior associate in the Riverside Office. Please contact Edgar Family Law for a free initial consultation with Mr. Cannon.