Whether the payment of union dues is to be deducted for the purpose of determining C.S.S.A. income is to be decided on a case by case basis. Rejecting the deduction in S.H. v. S.H., a June 17, 2013 opinion withdrawn from publication, Supreme Court Clinton County Acting Justice Timothy J. Lawliss held that the father failed to meet his burden to show that those dues did not reduce his personal expenses.
In this divorce action, the father was employed at a union plant and paid monthly union dues to the United Steel Workers.
This opinion concerned only whether or not union dues paid by the father should be deducted from the father’s gross income prior to calculating the father’s income for child support purposes.
Domestic Relations Law §240(1-b) sets forth the methodology the Court must follow to determine the non-custodial parent’s child support obligation. Pursuant to D.R.L. §240(1-b)(b)(5), income for support purposes shall mean, but shall not be limited to, the sum of the amounts determined by the application of clauses (i), (ii), (iii), (iv), (v) and (vi) of that sub-paragraph, reduced by the amount determined by the application of clause (vii) of that sub-paragraph.
Union dues are not a specifically allowed deduction under D.R.L. §240(1-b)(b)(5)(vii), nor does the subsection contain a catch all “other” category leaving deductibility to the Court’s discretion. The question before the Court, then, was whether or not union dues qualify as a deduction under the only possible category: “unreimbursed employee business expenses except to the extent said expenses reduce personal expenditures” (subsection [vii][A]).
After an extensive search, the Court could not locate any appellate authority which resolved the question and only very limited trial level authority. In Frazier v. Penraat, 5 Misc.3d 1032[A], 799 N.Y.S.2d 163 (Fam. Ct. N.Y. Co. 2004), the Family Court Judge, upon review of objections, held without explanation, that “[i]t was improper for the magistrate to deduct union dues from petitioner’s income as this is not a recognized deduction under the Child Support Standards formula for calculating Adjusted Gross Income.”
DRL § 240(1-b)(b)(5)(vii)(A) does not define “unreimbursed employee business expenses” by reference to the I.R.S. criteria, nor by any other method. Nevertheless, the Court found it appropriate to look to I.R.S. regulations and publications for guidance as to how union dues are treated for tax purposes.
Justice Lawliss noted that in LaPorte v. LaPorte, 263 A.D.2d 585, 693 N.Y.S.2d 666 (3rd Dept. 1999), the court held that “in calculating income, the statute (DRL § 240) provides a deduction for, inter alia, unreimbursed employee business expenses except to the extent said business expenses reduce personal expenditures,’. . . [h]owever, such expenses are properly deducted from parental obligations only when proven, usually by tax returns accompanied by records and receipts . . . .”
The IRS defines unreimbursed employee expenses (subject to limitations) as those expenses:
- that are paid or incurred during the individual’s tax year;
- that are for carrying on the individual’s trade or business of being an employee; and,
- that are ordinary and necessary.
The IRS defines an expense as ordinary if “it is common and accepted in your trade, business, or profession” and defines an expense as necessary “if it is appropriate and helpful to your business.” An expense “does not have to be required to be considered necessary.” Thus, union dues may be considered by the IRS as unreimbursed employee expenses.
For purposes of determining whether union dues are deductible under DRL § 240(1-b)(b)(5)(vii)(A), however, the Court must do more than apply the IRS criteria. To conclude that the expenses are deductible, the Court must also determine if “said expenses reduce personal expenditures.” DRL § 240(1-b)(b)(5)(vii)(A).
Justice Lawliss would not conclude that in all cases, without exception, an individual’s personal expenditures would never be reduced by the payment of union dues. The Court noted that there exists an array of possible union benefits which may reduce a individual’s personal expenditures. An individual, for example, may as part of their union benefits have some form of coverage for that individual’s dental needs; thereby, reducing that individual’s out of pocket costs for dental services. On the other hand, the Court could not conclude that in all cases, without exception, an individual paying union dues always has his or her personal expenditures reduced.
Accordingly, Judge Lawliss found:
the ability to deduct union dues for purposes of calculating an individual’s income for child support purposes must be determined on a case by case basis.
In the case before him, the father was the party who would benefit if union dues were to be deducted from his earnings for purposes of calculating his child support obligation. Therefore, the Court held, the father had the burden of proof on this issue.
Justice Lawliss found that the father offered insufficient evidence to substantiate a claim for a deduction for the payment of union dues: he did not offer any evidence as to whether or not his union dues reduced his personal expenses. The father also failed to submit his tax returns to the Court for consideration. In this regard, Justice Lawliss noted that in Grasso v. Grasso, 90 A.D.3d 1672, 936 NYS2d 452 (4th Dept. 2011), a deduction for business entertainment expenses was allowed where the individual benefiting from the deduction did introduce the filed tax returns, listing the expenses as a deduction, and the other party failed to demonstrate the expenses were personal in nature.
However, here, Justice Lawliss would not reduce the father’s income for child support purposes by the amount he paid for union dues.
Question: If the father had introduced his tax returns, would the burden have shifted to the mother to prove that the dues did reduce the father’s personal expenses?