Riggs v. Riggs

622 N.W.2d 861

261 Neb. 344

Pamela Jean RIGGS, Appellant, v. Gary Eugene RIGGS, Appellee.

No. S-99-1374.

Supreme Court of Nebraska.

March 9, 2001.

Robert B. Creager, of Anderson, Creager & Wittstruck, P.C., Lincoln, for appellant.

Tracy A. Follmer, of Keating, O'Gara, Davis & Nedved, P.C., Lincoln, for appellee.

WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

GERRARD, J.

The primary issue in this appeal is whether the earned income credit (EIC) under the federal Internal Revenue Code is a "means-tested public assistance benefit" for purposes of the Nebraska Child Support Guidelines (Guidelines), paragraph D, and therefore to be excluded as income in the calculation of child support. For the reasons stated below, we conclude that the EIC is a "means-tested public assistance benefit" and should not be considered as income for purposes of calculating child support.

FACTS

Pamela Jean Riggs (mother) and Gary Eugene Riggs (father) were divorced pursuant to a decree entered on August 15, 1997. In the original decree, the father was ordered to pay $959.61 per month in child support for the couple's two minor children. On March 26, 1999, the mother filed a petition for modification seeking an increase in child support based upon an increase in the father's income.

The modification action came on for trial on July 28, 1999. Evidence adduced at the modification hearing revealed that the father's income had increased from $56,000 annually at the time the parties were divorced in 1997 to $72,500 annually at the time of the modification hearing.

At the hearing, the mother and the father offered conflicting child support calculations. The main conflict relevant to this appeal was that the calculations differed with respect to the treatment of state and federal tax deductions as calculated under paragraph E of the Guidelines. The mother's proffered child support calculation worksheet deducted amounts for federal and state taxes from her gross income. The father submitted a child support calculation worksheet which deducted no federal or state taxes from the mother's gross income.

The father, who is a certified public accountant, testified that the mother is not required to have federal taxes withheld from her paycheck each month due to the mother's qualification for an EIC. The father testified that the mother could arrange it so that she would receive a small cash credit from the Internal Revenue Service (IRS) along with each paycheck due to her qualification for an EIC. The father claimed that allowing the mother to deduct any state or federal income tax from the mother's gross income in calculating child support would falsely represent her federal and state tax liability as she is refunded the full amounts she pays in such taxes each year. Further, the father asserted, not only is the mother refunded the amount of federal income tax she has withheld from her paycheck, the mother receives a credit in the form of cash from the IRS due to her low income level and qualification for the EIC on her federal income tax return.

In its order dated September 13, 1999, the district court found that there was a material change in circumstances thereby warranting a modification in child support. The district court apparently agreed with the father's calculation of child support as it included the father's proffered child support calculation worksheet as an attachment to the court's order of modification. The court did not deduct state or federal taxes from the mother's income in calculating her net income, and the court's order does not state why there was no deduction for state and federal taxes. The district court determined that the father's child support obligation was to increase to $1,045.32 per month for the parties' two minor children and $716 per month when one minor child remained. The increase was to be effective as of August 1, 1999. The mother appealed.

ASSIGNMENTS OF ERROR

The mother assigns that the district court erred in (1) failing to include her federal withholding tax liability as a deduction from income when calculating child support, (2) failing to make the increase in child support retroactive to the date of the mother's petition for modification, and (3) failing to award the mother reasonable attorney fees.

STANDARD OF REVIEW

Modification of the amount of child support payments is entrusted to the discretion of the trial court, and although, on appeal, the issue is reviewed de novo on the record, the decision of the trial court will be affirmed absent an abuse of discretion. Sears v. Larson, 259 Neb. 760, 612 N.W.2d 474 (2000). A judicial abuse of discretion exists when a judge, within the effective limits of authorized judicial power, elects to act or refrain from acting, but the selected option results in a decision which is untenable and unfairly deprives a litigant of a substantial right or a just result in matters submitted for disposition through a judicial system. Brown v. Brown, 260 Neb. 954, 621 N.W.2d 70 (2000).

On a question of law, an appellate court is obligated to reach a conclusion independent of the determination reached by the court below. Jones v. Paulson, 261 Neb. 327, 622 N.W.2d 857 (2001).

ANALYSIS

EARNED INCOME CREDIT

The primary question that the mother's first assignment of error presents is whether the EIC under the Internal Revenue Code is a "means-tested public assistance benefit" for purposes of paragraph D of the Guidelines and therefore should be excluded from the calculation of income for child support purposes.

Paragraph D of the Guidelines defines the total monthly income that each party shall list on the guideline worksheet, in relevant part, as follows: "D. Total Monthly Income. This is income of both parties derived from all sources, except all means-tested public assistance benefits and payments received for children of prior marriages. All income should be annualized and divided by 12."

The mother's income portion of child support guideline worksheet 1 was thus set forth:

Mother Father 1. Total monthly income from all sources (except payments received for children of prior marriages and all means-tested public assistance benefits) 2,340.00 6,042.00 ________ _________ 2. Deductions a. Taxes Federal 202.88 1,184.77 ________ _________ State 45.26 306.13 ________ _________ b. FICA 179.01 462.21 ________ _________ c. Health insurance 236.00 -------- -------- d. Mandatory retirement -------- -------- e. Child support previously ordered for other children f. Total deductions 427.15 2,189.11 _______ ________ 3. Monthly net income 1,912.85 3,852.89 -------- --------

The father's income portion of child support guideline worksheet 1, on the other hand, stated:

Mother Father 1. Total monthly income from all sources (except payments received for children of prior marriages and all means-tested public assistance benefits) 2,390.00 6,042.00 ________ ________ 2. Deductions a. Taxes Federal 1,33.3.70 -------- --------- State 319.30 -------- --------- b. FICA 182.83 462.21 ________ _________ c. Health insurance -------- 236.17 d. Mandatory retirement -------- --------- e. Child support previously ordered for other children -------- -------- f. Total deductions ________ ________ 3. Monthly net income 2,207.17 3,690.62 -------- -------- The mother asserts that the EIC is a means-tested public assistance benefit that should be excluded from the calculation of her income for purposes of child support under paragraph D of the Guidelines. Absent the EIC, the mother claims that she would have paid state and federal taxes in the amount deducted from her income as calculated on the mother's worksheet 1. Therefore, she argues that the amount of her tax liability, before the EIC is applied, should be deducted from her income because the amount of tax liability which is satisfied by the EIC is not to be excluded from her income if the credit is, in fact, a means-tested public assistance benefit.

The father argues, as he did in the district court, that the mother should not be allowed to deduct state and federal income tax from her gross income on worksheet 1. The father claims that such a deduction would falsely represent the mother's federal and state tax liability as she is refunded the full amount she pays in such taxes, plus some credit in the form of cash from the IRS due to her low income level and qualification for the EIC on her federal income tax return.

We must, therefore, first address whether the EIC is a "means-tested public assistance benefit" for purposes of paragraph D of the Guidelines. The Guidelines do not define the term "means-tested public assistance benefit." However, there is a plethora of statutory and regulatory law that provides guidance to us in determining first the meaning of "public assistance benefit" and then the descriptive term "means-tested."

In federal law, the legislative history of the Welfare Reform Act of 1997 reveals that "public benefit" was originally defined as one that includes "`cash, medical, housing, and food assistance and social services.' " Aleman v. Glickman, 217 F.3d 1191, 1194 n. 2 (9th Cir.2000) (quoting H.R.Rep. No. 104-725 (1996), reprinted in U.S.Code Cong. & Admin.News 1996, pp. 2183, 2649). Also, Congress has enacted legislation which restricts aliens' access to welfare and public benefits. In so doing, Congress has defined "federal public benefit" to mean the following:

(A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and

(B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds

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