Legislation which aims to allow tax agencies to honor divorce agreements was passed by the Assembly Revenue and Taxation Committee on Monday.
Senate Bill 526, which was authored by Senator Sharon Runner, R-Antelope Valley, and Senate Republican Leader Jean Fuller, R-Bakersfield, and was sponsored by Board of Equalization members George Runner and Fiona Ma, gives the Franchise Tax Board broader authority to consider a legal divorce agreement when determining if one spouse can be relieved of a joint tax liability.
SB 526 passed with unanimous, bipartisan support and now moves to the Assembly Floor.
“SB 526 will provide the Franchise Tax Board with a greater ability to consider a divorce agreement when making a tax liability ruling,” said Fuller. “This may reduce the need for additional expenses and duplicative paperwork, helping reduce costs and stress in an already difficult and expensive process.”
“Forcing taxpayers to go back to court in order to enforce a divorce agreement is inefficient government,” said Runner. “An individual should not have to go back to court to keep from paying a tax liability for which they are not responsible. SB 526 helps real taxpayers who face real challenges.”
The Board of Equalization often hears income tax appeals from taxpayers whose divorce agreement states the other party is responsible for a joint tax liability incurred during marriage. They believe they are protected from liability by a court approved divorce agreement only to discover they must return to court to enforce the agreement or pay the tax liability owed by an ex-spouse. Most of these cases involve women.
By giving the FTB broader authority to consider a divorce agreement when determining tax liability, SB 526 will help ease the financial burden of spouses who have no legal obligation to pay the tax, as stipulated by their divorce agreement.