Verifying both parties incomes in an Illinois divorce is crucial to determining both maintenance (formerly known as alimony) and child support. Often, it is necessary to request tax returns from the IRS in order to verify a party’s true income.
Why Income Must Be Verified In An Illinois Divorce
Both parties’ net incomes must be ascertained in an Illinois divorce.
“”Net income” includes maintenance not includable in the gross taxable income of the payee for federal income tax purposes under a court order in the pending proceedings or any other proceedings and shall be included in the payee’s net income for purposes of calculating the parent’s child support obligation.” 750 ILCS 5/505(a)(3)(B)
Once net income of both parties is determined, maintenance and child support can be calculated.
“Maintenance…shall be calculated by taking 33 1/3% of the payor’s net annual income minus 25% of the payee’s net annual income.” 750 ILCS 5/503(b-1)(1)(A)
There is a cap on the maintenance calculation.
“The amount calculated as maintenance, however, when added to the net income of the payee, shall not result in the payee receiving an amount that is in excess of 40% of the combined net income of the parties.” 750 ILCS 5/503(b-1)(1)(A)
Child support calculation in Illinois is more byzantine but is still based on net incomes of the parties.
“The court shall compute the basic child support obligation by taking the following steps:(A) determine each parent’s monthly net income;(B) add the parents’ monthly net incomes together to determine the combined monthly net income of the parents;(C) select the corresponding appropriate amount from the schedule of basic child support obligations based on the parties’ combined monthly net income and number of children of the parties; and (D) calculate each parent’s percentage share of the basic child support obligation.” 750 ILCS 5/505(A)(1.5)
How Is Income Determined In An Illinois Divorce
In an Illinois divorce, a party’s income is determined…by what they say it is.
Each party fills out a financial affidavit attesting to their income, assets and debts. There is very little required to verify that self-testified income.
“The financial affidavit shall be supported by documentary evidence including, but not limited to, income tax returns, pay stubs, and banking statements.” 750 ILCS 5/501(a)(1)
Fake Tax Returns In An Illinois Divorce
If a person is self-employed, they control how their income looks on paystubs. They can withdraw cash from their business in lieu of depositing their earnings in a bank.
What’s the penalty for lying on your financial affidavit?
“If a party intentionally or recklessly files an inaccurate or misleading financial affidavit, the court shall impose significant penalties and sanctions including, but not limited to, costs and attorney’s fees” 750 ILCS 5/501(a)(1)
This language is REALLY vague so it’s barely enforced beyond awarding attorney’s fees only after the “inaccurate or misleading” information is revealed.
While the Illinois civil courts provide a vague and seemingly limited financial penalty, the federal government is not so lenient. Lying on a tax return has huge negative implications.
“Any person who…Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter… shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution.” 26 U.S.C. § 7206
Therefore, it is possible (probable, even), that a party to a divorce will state their income honestly on their filed tax return but present a falsified tax return to their opposing party in a divorce. After all, tax returns don’t even come with a stamp certifying that they’ve been filed.
Verifying Tax Returns In An Illinois Divorce
Tax returns are extremely private information. You cannot simply request someone else’s tax return. If you even access someone else’s tax return without their permission, that is a crime.
“It shall be unlawful for any person to whom any return or return information….is disclosed in a manner unauthorized by this title thereafter willfully to print or publish in any manner not provided by law any such return or return information. Any violation of this paragraph shall be a felony punishable by a fine in any amount not exceeding $5,000, or imprisonment of not more than 5 years, or both, together with the costs of prosecution.” 26 U.S. Code § 7213
To verify an adverse party’s tax return through the IRS you must make a special request via Form 4506-T.
The instructions on the form direct you to “[u]se Form 4506-T to request tax return information. Taxpayers using a tax year beginning in one calendar year and ending in the following year (fiscal tax year) must file Form 4506-T to request a return transcript.”
By checking the box by # 8 on Form 4506-T, you can also request supporting documents such as W2s and 1099s.
If you are seeking joint tax return transcripts, you, as the spouse, may sign Form 4506-T
“Transcripts of jointly filed tax returns may be furnished to either spouse. Only one signature is required. Sign Form 4506-T exactly as your name appeared on the original return. If you changed your name, also sign your current name.”
If you are seeking a tax transcript that is exclusively in the other party’s name, you will need their signature.
“Form 4506-T must be signed and dated by the taxpayer listed on line 1a or 2a. The IRS must receive Form 4506-T within 120 days of the date signed by the taxpayer or it will be rejected. Ensure that all applicable lines are completed before signing.”
The IRS can only mail the requested tax transcripts to the tax filer (who may falsify them again). If you want the tax transcripts delivered to you directly, you must have the filer sign Form 4506-C which authorizes the mailing of tax transcripts to a third party (you or your attorney).
Best practice is to have the other party also sign Form 8821 allowing your lawyer’s firm to inspect and receive confidential IRS information.
If the other party refuses to sign Form 4506-T, Form 4506-C or Form 8821, you can motion for them to sign the form.
“Either party may petition or move for: …other appropriate temporary relief” 750 ILCS 5/501(a)(3)
Failure to follow an order to release tax transcripts will likely result in a finding of contempt and sanctions prohibiting the presentation of ANY evidence on the part of the party refusing to verify their tax returns.
If you’re going through a divorce and are suspicious of your spouse’s tax returns specifically and income in general, contact my Chicago, Illinois family law firm to speak with an experienced Illinois family law attorney.
