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Illinois

Income Shares is Here: Now What?

Implementation Questions and Some Possible Answers

Child support in Illinois completely changed on July 1, 2017 with the implementation of the original income shares statute |P.A.99-0764] ana the technical corrections |P.A.100-0015]. If you are going to read the statute (!) don’t bother with the original act, the technical corrections embodies the entire current version, just look to SB 69, now P.A.100-0015. This article will recap the statute, identify ana attempt to provide answers for several implementation and interpretation concerns over this new statute.

Let’s recap: Illinois is now going to compute child support by looking to both parent’s net incomes.

Step 1: Determine the net incomes of each parent. There are two ways to determine net income: standardized and individualized. The standardized net income method assumes the parent is filing incomes taxes as Single, with no itemized deductions – only the standard deduction, and only one exemption for him/herself unless the dependency exemption has been allocated by agreement or court
order. There is a well-designed calculator on the HFS website
https://cscwebext.hfs.illinois.gov/CscWebEx/app/csc?execution=e1s1 which will provide the child support amount based on gross incomes. Embedded in this calculator is the official Gross to Net Income
Conversion Table, based on these assumptions. All well and good for HFS, but for the private bar, the standardized tax method does not fit for most cases. The differences in net income from application of
the individualized tax method can have significant impact on the final child support obligation and payment. Simple reliance on the standardized tax method computation and the HFS Child Support
Estimator can be detrimental to your client’s interests. Software programs to calculate net income, or accountant computation, will provide accurate computations we can rely on to present the
individualized net income amounts to the Court.

Implementation Problem #1: Who decides whether to use standardized or individualized net income? The statute provides a rebuttable presumption for the standardized net income method. That, I believe, shifts the burden on us as practitioners to present the appropriate information as to the individualized net income result. This can easily be done through utilizing software or accountant computation. For example, in Family Law Software (www.familylawsoftware.com) we have a Tax Worksheet which shows
both the standardized and actual (individualized) taxes to be deducted to arrive at net income. The statute further provides either party can opt into the individualized tax method. If there is a dispute, the
court can determine which one to use based on appropriate documentation of the basis for the computation. I read this to provide the court can reject the individualized method if insufficient documentation was provided, and can reject the standardized method if appropriate documentation is provided. But you have to do the computations to decide whether to accept or dispute the other side’s
computations and prevent your client’s interests from being impaired.

Step 2: We will then take that combined net income number, and find the corresponding Basic Child Support Obligation (“BCSO”) from a Schedule. The Schedule is promulgated by the IL Department of
Healthcare and Family Services (HFS), and developed by economists based in large part on the Consumer Expenditure Survey done by the federal government.

Implementation Problem #2: How can the same child support amount based on expenditures be the same in Naperville and Cairo Illinois? Can I argue for a deviation from the BCSO in the Schedule? We start from the requirement that every state can have only one schedule for child support, and the obligation must be consistent everywhere in the state. While as a matter of public policy, this could have been handled in many different ways, the variables determined to be relevant in our Schedule are only combined net income and number of children. In order to argue for deviation, we have to understand how the schedule was built. A report on the HFS website provides an explanation of the basis for the Schedule, this should be required reading for all of us: https://www.illinois.gov/hfs/SiteCollectionDocuments/TechnicalDocumentationIllinoisScheduleNetInco
meTable.pdf

Step 3: Allocate the BCSO between the parents in the percentages of their individual incomes to the combined net income. In the example we have been using all in trainings over the state, if Dad’s net income is $7,500, and Mom’s net income is $2,500, their combined net income is $10,000. Mom’s share is 25%, Dad’s share is 75%. We apply those percentages to the BCSO at $10,000 per month combined net income, which for one child happens to be $1,445. If there is not shared parenting in this case and Mom is the majority time parent, then Dad will pay Mom 75% of the BCSO of $1,445, or $1,083.75. Mom’s share of the BCSO of $361.25 will be retained by her to apply to the children’s expenses. Mom, as the majority time parent without shared parenting, will have the entire $1,445 of BCSO to use to support the children.

Step 4: We have to determine the parenting time schedule and allocation of overnights. If there is shared parenting, defined in Illinois as each parent having at least 146 overnights, then we add several steps to the child support calculation to determine the final child support obligation. There are several ways to calculate the allocation of overnights once a parenting time schedule has been decided. Here we arrive at the one of several concerns over the new statute: the fight over “days for dollars”, or in our case, “overnights for dollars”. I believe we will come to realize two things: (1) reaching the requisite 146 overnights is not going to be that hard in cases with active, involved parents; and not even a problem in cases where one parent is more traditionally secondarily involved in the children’s daily lives and (2) demands for 40% of the parenting time (the equivalent of 146 overnights) is better for the children and the divorce process than the prior demands for 50% of the parenting time which were financially motivated. At least now the anticipated result of a demand for 146 overnights will not be no child support – there will still be a child support obligation in almost all cases, just probably less not zero.

The calculation of the number of overnights potentially is a logistical knot to be unraveled – each of us will need to find an easy, reliable, and viable method to count the overnights. While Family Law Software has an overnights calculator, it does not tally the days allocated to each parent over the year, it depends on your count and input. I have used software such as CustodyXChange (www.custodyxchange.com) to create calendars that automatically count the overnights, but it is a time-consuming task. We all have developed methods of plotting out parenting time calendars, including colored markers on a paper calendar. The particular difficulties in accurately counting the entire year of overnights revolve around not the regular parenting time schedule, which is relatively easy to compute (the number of overnights weekly or every two weeks for example). The complexity revolves around the holidays and vacation allocations, which both add and subtract from the total number of overnights. Don’t forget that when Dad gets 7 days of vacation, if it includes his regular weekend he is not adding 7 overnights, he is adding only the additional nights. When Mom also gets a week of vacation with the children, it subtracts from Dad’s total overnights if his regular schedule would have included any of those nights. The accuracy of that tally will be important as the number of overnights approaches 146.

Implementation Problem #3: What if the non-majority time parent does not actually exercise the 146 overnights he or she fought so hard to obtain? Initially, this problem may be raised as a concern during settlement negotiations, or it may arise after the fact. If during the negotiations, several options could be discussed to address the concern. If after time has passed, there are opportunities in the statute to modify or compensate a parent. I have thought of the following, and there may be other ideas we could share with each other as we begin addressing the new statute in our practices:

  1. If after the fact, file a Petition to Modify Child Support and possibly also a Petition to Modify the Parenting Time Schedule to comply with the actual schedule being implemented. The problem, of course, is that a Petition to Modify Child Support can only apply prospectively, and will not compensate the majority time parent for the lost child support or the additional expenditures for the child(ren) when the other parent didn’t actually shoulder the allocated share of the burden.
  2. File a Petition under 607.5 of the IMDMA, Abuse of Allocated Parenting Time, and utilize the remedies to be found in that section of the statute.
  3. Require a bond to be posted (or an escrow account established), pursuant to 607.5(4) to be forfeited to the other parent if the 146 overnight schedule is not followed. Again, the amounts could be determined by the difference in child support impacted by the shared physical care formula.
  4. Build in a dollar amount to be paid if the actual exercise of parenting time does not comply with the planned schedule. Of course, parameters of how many missed overnights, and how frequently this occurs will be important to define. One method to calculate an appropriate dollar amount is to compute the support obligation as a basic support obligation and a shared
    physical care obligation, and use the difference as the compensatory dollar amount.
  5. Determine a set dollar amount per unexercised overnight to be paid to the other parent, regardless of reason for the failure to exercise the time. This could go both ways, and be part of the overall provisions for right of first refusal and variations of the parenting time schedule that are a normal part of parenting after divorce. Of course, this has to be balanced against the other interests of the parents and the children encouraging the flexibility and open exchange of the children as time goes on.

Step 5: If at least 146 or more overnights are allocated to both parents, we then enter the Shared Physical Care formula. First, apply the shared physical care multiplier to the BCSO. This is a simple multiplication of 1.5 to the BCSO. In the prior example, the basic support obligation of $1,445 multiplied by 1.5 yields a shared physical care child support obligation (SPCSO) of $2.167.50.

Step 6: Again, the SPCSO is allocated between the parents based on their percentage share of the combined net income. The percentage allocation based on the combined net incomes does not change, in our example the same 75/25 percent allocation applies, but now to the enhanced number for the shared physical care obligation.

Step 7: Each parent’s allocated share of the enhanced SPCSO is then multiplied by the allocated share of parenting time of the OTHER parent. Stephanie Kasten of the Gitlin Law Firm aptly described this as paying the other parent from your share of the child support obligation for the additional share of the children’s expenses that parent will be paying during their parenting time. This cross multiplication is the part of the new income share guideline formula that seems to be the most confusing and complex to most of us. It becomes easy with the use of software, and is going to become routine as we get used to this new formula.

Step 8: Only in cases where the shared parenting formula applies, the parents’ respective obligations are then netted, with the parent with the higher obligation paying the parent with the lower obligation the
difference as their child support obligation. This netting does not apply to the basic support obligation where there is no shared physical care.

Implementation Problem #4: Are we going to still see the possibility of a majority time parent (formerly custodial parent) required to pay support to the non-majority time parent (formerly non-custodial parent)? This controversial result can occur in shared physical care situations, but not in basic support obligation cases where there are not at least 146 overnights. This is due to the instruction to net the respective support obligations in shared physical care cases.

After July 1, we are now required to use the income shares child support guidelines for all pending and undetermined matters. Some issues have arisen about what this means.

Implementation Problem #4: Matters which are currently pending for determination or modification,
and which were filed prior to July 1 (sometimes many months or years prior). Many of us have experienced cases that were delayed until the new law became effective, hoping to get the benefit of the new guidelines. While it is clear a determination of support going forward needs to be determined under the new guidelines (although deviations are always possible), should the new guidelines essentially be applied retroactively to the determination for the time the pending motion was waiting for determination? I would go back to the federal statutes underlying all of the child support guidelines here and across the country. We are required to have only one guideline for the entire state. Until July 1, that guideline was based on the percentage of obligor’s income method. As of July 1, the guideline is based on the income shares method. I would posit that until July 1, the support can only be determined by the then applicable statute, using the percentage of obligor’s income method.

Implementation Problem #5: With both the amount and allocation of the BCSO dependent on the determination of each parent’s net income, how do we account for variable income when setting child support? Clearly, a change income can always be a basis for a Petition to Modify Support if it is a substantial change of circumstances, that Petition can only effect a prospective modification. If we know a parent typically gets bonuses, or has commission-based compensation, overtime or other variable income, how can we set child support that adequately accounts for that variability. This is made especially difficult (more than under the prior percentage of obligor income method) because both the amount and allocation of the basic child support obligation (BCSO) is impacted by additional income on one side. This can be even more complicated if both parties’ incomes are subject to variability. Some ideas to address this problem:

  1. True-up child support periodically. A true-up agreement could be applied retroactively, to the past year or other period of child support, or prospectively based on inclusion of the additional income to set support for the next period of time. Additional considerations for negotiating these true-up agreements are items like the payment terms for the retroactive additional support payments (lump sum payment or payment terms over a period of time?). The process for recomputation of the support amount should be determined specifically – when will this be done, what information needs to be provided, who will do the calculation, will there be a process for dispute or verification of the computation, how will the new amount be memorialized and/or enforced?
  2. Determine an amount or percentage of additional income to be paid as additional child support. While the amount and allocation of support changes if the net income changes, one can run several alternative scenarios and look at realistic other income results and predetermine additional support amounts to be paid, even if not precisely accurate predictions of what later occurs. This can always be expressed as additional dollar amounts or percentages on ranges of income. As has been expressed in other venues, it may be “good enough for government work”. Provide for permissive modifications retroactively in the agreement. If this is an agreement, there is no reason why the bar to retroactive modifications could not be waived in certain well-defined circumstances. Provide for periodic production or exchange of income information, and permit either party to trigger a review of the support amount for a prior period with specific terms for any shortfall or overpayment.

Of course, while these new guidelines now apply to all child support determinations, there can still be deviations from the guidelines (as long as appropriate findings are made and the actual support amount is referenced). For negotiated cases, consider whether support guidelines have any meaningful application, or whether the family’s best interests might be served by allocating or sharing payment of the children’s direct and indirect expenses rather than an arbitrarily defined child support amount. While the support amount is supposed to reflect expenditures (for an intact family) at various income levels for the children, those statistical averages may not in any way reflect your client’s family’s expenditures. Consider moving outside these defined amounts to allow the clients to make their own agreements in mediation, collaborative, or other settlement processes.

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