Individual Seeks IRS Recognition of Health Insurance Obligations in Divorce Decrees

Good morning distinguished panel,

My name is Annmarie Davidson and I am honored to be asked to speak with you today on a subject that has become near and dear to my heart. First I would like to acknowledge that Legislative Director, Scott Cunningham, from Kenny Marchant's office and the reason I stand before you; my son Michael Davidson, also join me this morning. I hope that what I have to say in the next few minutes will be taken past these walls and into the offices of the authors of this regulation, with a renewed vigor to modify the intent of Shared Responsibility.

I feel I am uniquely qualified to bring this issue to your attention as I am a single parent in every sense of the word. I have raised two children alone. When I say alone I mean without a co-parent, without family members to babysit from time to time, without welfare or food stamps, and without child and health care support. In the case of my son Michael, I have a valid divorce decree which separates the community debt and who is responsible for child support and health care. No one is monitoring this decree; therefore my ex-husband has not met his obligations since July of 2008. Furthermore, I have been 100% responsible for my son's health and health related costs since his birth.

According to a US Department of Health and Human Services report to Congress for FY2011, there were over 7 million valid decrees where health insurance was ordered to be paid by the non-custodial parent. Of that 7 million, only 30% of those required to provide health insurance were meeting their obligation. To put it in a larger scope, over 31 billion dollars was scheduled to be collected in child support alone that same year. Not to be underscored is another alarming number which shows over 111 billion dollars in child support arrearages in the United States. California leads the nation in uncollected child support over a five year period and our home state of Texas at #2. Those numbers don't even include health care costs. I think I speak for many parents when I say it's a broken system and I'm here to see that we are not further disgraced.

The IRS does recognize divorce. Both publications 555 and 504 speak directly to the payments of child support or alimony, the liquidation of taxable items such as stocks, housing and other assets between spouses as this liquidation creates a taxable event. The IRS is also in the business of intercepting tax returns from those individuals unwilling to meet their child support or alimony obligations. What the IRS hasn't acknowledged is the health care obligation that is listed in a valid divorce decree. It is up to the states to hold the obligor responsible and for the IRS it would be a logistical nightmare to track this, but in the same breath, it is exactly what the IRS has written into the shared responsibility regulation.

By definition, shared responsibility means two or more people sharing or caring for the same thing, such as a child. As the regulation is written today, the custodial parent not named as the obligor would be held responsible for the payment each year. Non custodial parents who are adept at skirting their obligations to begin with, as evidenced by the 111 billion in arrearages, would likely jump on the exemption bandwagon and then be unaccountable on two levels: state and federal. If this regulation is allowed to go into effect as it's written, neglect will have a new face.

I strongly recommend that this panel and or authors of the shared responsibility regulation attempt to close some of the gaps as it relates to valid divorce decrees. With that said, I would like to make the following recommendations to this panel:

If a valid divorce decree exists and includes health care support orders, on or about December 31, 2013 the custodial parent sends to the IRS a certified copy of the pages listing the affected children, the obligor's name and social security number. The custodial parent is done. They are exempt from the shared responsibility payment.

The IRS notifies the obligor of the shared responsibility payment due unless they can prove they've met their obligation for the current year and 12 months prior for all children affected. This penalty will be deducted from their tax return, or sent in the form of a bill if they do not qualify for a return, or they don't file. They will not be allowed to file an exemption under this regulation unless they are incarcerated.

I believe the IRS has a clear and unobstructed view of who is taking care of our nation's children. You may not see what kind of car we drive, what we wear year after year so our kids have the latest fashions, or the exhausted looks on our faces as we begin our second shift as a single parent. But you do bear witness to it in our returns; the amount we pay every year in child care, our "head of household" filing status, and our desperate attempt to grab every and any tax credit we are legally allowed. Penalizing us under the shared responsibility payment would be, well I'll just say it -- cold.

So my mission today was simple -- to be the voice of reason for the millions of single parents who didn't know they had a voice in this. Today I am their voice. There are days we wish the government would get out of our way and out of our personal business, other days we admit we need you. Today is one of those days.

I came a long way today to tell you to take a second look at your words. I am a writer by profession, so I am always aware of how my verbal and written words affect all who read and hear them. Saying them out loud is sometimes the best way to catch my mistakes. The author's of the shared responsibility regulation made a mistake, now maybe they can go back and fix it. I'm going to go home and back to my life and I pray that you remember me as the single mom who to came to Washington and gave you a new way of looking at this regulation. I also pray you will support and lift up parents everywhere as we continue with the most important role of our lives -- raising our national treasures.

Thank you.