Dateline Sacramento — Legislation sponsored by Board of Equalization Vice Chair George Runner today advanced in the Senate Governance and Finance Committee today. Senate Bill 526 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,” Mr. Runner said, “a tax agency should respect that agreement.
“Telling taxpayers they must go back to court to enforce a divorce agreement is inefficient government. This must be changed.”
Currently, 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.
However, they discover their only recourse to enforce the agreement is to go back to court or pay the tax. S.B. 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.
Sen. Jean Fuller (R-Bakersfield), who is carrying the bill, said that “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.”
She maintains that S.B. 526 will provide the Franchise Tax Board with the flexibility to consider the divorce agreement when making a liability ruling. “This will reduce the need for additional expenses to the impacted party,” she said.
SB 526 is also supported by Board of Equalization member Fiona Ma.
Mr. Runner may be contacted at www.boe.ca.gov/Runner.
