Posted by: koherston | May 22, 2014

Interest on Overpayment of Child Support and Allocation of Tax Exemptions Disputed in Williamson County Divorce: Blankenship v. Cox

Facts: Mother and Father divorced in 2000. Years later, Father petitioned to modify his child support obligation. When the trial court granted Father’s petition and made the modification retroactive to the date Father filed his petition, it was determined that Father had overpaid his child support by $41,683. Father was awarded a judgment in that amount. The trial court established a payment plan whereby Mother would satisfy the judgment through 51 monthly payments of $913.66, inclusive of post-judgment interest at the rate of 5.25%.

When the parties divorced, there were four federal income tax exemptions (for their four children) that were divided equally, i.e., two exemptions to Mother and two to Father. Later, when there were only three exemptions available, the trial court allocated two to Father and one to Mother. Later still when there were only two exemptions available, the trial court gave one to Father and one to Mother.

Mother appealed the ruling on post-judgment interest and both parties appealed to ruling on the tax exemptions.

On Appeal: The Court of Appeals affirmed the trial court.

Although many issues were appealed, I think only the following two issues are worth noting.

Overpayment of Child Support. Mother argued the trial court erred in assessing interest of 5.25%.

Tennessee Code Annotated § 47-14-121 provides that post-judgment interest shall be assessed pursuant to the formula set forth in the statute. The resulting interest rate for a judgment entered at any particular time can be found here.

The Court ruled:

Father was entitled to a judgment for the amount of child support he paid in excess of his obligation. Once a monetary judgment was entered, the trial court was mandated by Tennessee Code Annotated §§ 47-14-121 and 47-14-122 to set the amount of interest to accrue on the judgment until it is paid. Accordingly, we find no error with the award of interest at 5.25 percent.

In other words, the assessment of post-judgment interest on a child support overpayment is mandatory and must be set at the statutory rate.

Allocation of Tax Exemptions. The Child Support Guidelines contain a “Taxation Assumption” that states in pertinent part: “The alternate residential parent will file as a single wage earner claiming one withholding allowance, and the primary residential parent claims the tax exemptions for the child.”

Mother argued the “taxation assumption” operates as a legal standard and, thus, the trial court erred in failing to allocate both tax exemptions to her. Father felt he should receive both exemptions.

The Court stated:

We respectfully disagree [with Mother’s argument] noting that our courts have held this “rule” is not obligatory on the trial courts. [The “Taxation Assumption”] simply describes the methodology used to compute spouses’ respective net incomes, and it is merely a mathematical assumption with no bearing on the trial court’s discretion to award the tax exemptions. Accordingly, the rule did not require the allocation of both tax exemptions to Mother; thus, we find no error with the trial court not allocating both tax exemptions to Mother.

Likewise, the Court found no error in the trial court’s decision to divide the exemptions equally because the parties agreed to “split the exemptions in half” when there were four exemptions available.

Accordingly, the trial court was affirmed on these two issues.

Blankenship v. Cox (Tennessee Court of Appeals, Middle Section, April 17, 2014).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.


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