Before a court can set an amount for guideline child support under 750 ILCS 5/505, a determination must be made as to a payor’s net income. What happens if a payor’s net income is difficult to ascertain? Section 5/505(a)(5) provides the court with the discretion to set reasonable support under such circumstances:
(5) If the net income cannot be determined because of default or any other reason, the court shall order support in an amount considered reasonable in the particular case. The final order in all cases shall state the support level in dollar amounts. However, if the court finds that the child support amount cannot be expressed exclusively as a dollar amount because all or a portion of the payor’s net income is uncertain as to source, time of payment, or amount, the court may order a percentage amount of support in addition to a specific dollar amount and enter such other orders as may be necessary to determine and enforce, on a timely basis, the applicable support ordered.
Public Act 91-0655 effective June 1, 2000
The portion of the new statute allowing percentage orders will not be effective until June 1, 2000. Until that time percentage orders are voidable. IRMO Mitchell, 181 Ill, 2d 169 (1998)
The threshold question in each case will be whether net income is difficult to ascertain or is uncertain. The Illinois courts have examined a variety of circumstances under which net income was determined to be difficult to ascertain. In IRMO Olson, 223 Ill.App.3d 636 (2nd Dist. 1992), the Second District explained the process:
As a prerequisite to determining the proper amount of child support, however, the court must first determine the non-custodial parent’s net income, which may be difficult to ascertain and an impediment to determining an award of child support. If present net income is not ascertainable or uncertain, a court may consider past earnings. The credibility and forthrightness of the non-custodial parent in disclosing income is a factor to be considered in accepting evidence of net income. ...We note initially that the court was not required to make specific findings because it did not deviate from the guidelines of the Marriage Act.
223 Ill.App.3d at 652 (citations omitted)
In cases where net income is not ascertainable or is uncertain, whether due to the credibility of the non-custodial parent or for other reasons, the Olson case stands for the proposition that the court can consider past earnings in determining support and need not make specific findings because the court is not deviating from guideline support.
In IRMO Snow, 277 Ill.App.3d 642 (4th Dist. 1996), the Appellate Court affirmed the trial court’s determination of support where the payor’s income was difficult to ascertain because he had started a new business (277 Ill.App.3d at 652). In Ivanyi vs. Granoff, 171 Ill.App.3d 411 (2nd Dist. 1988), the finding by the trial court that the testimony of the payor’s expert was confusing, was sufficient to support the court’s determination that the payor’s income was difficult to ascertain. In IRMO Severino, 298 Ill.App.3d 224 (2nd Dist. 1998), the Appellate Court determined that Section 505(a)(5) applied where the payor’s credibility prevented the determination of his net income. (298 Ill.App.3d at 229-231) The Second District stated:
We believe that Section 505(a)(5) merely requires the court, in situations where the net income of a party is difficult to determine, to set support in an amount reasonable in a particular case and express the award of support in a dollar amount.
IRMO Severino, 298 Ill.App.3d at 231.
In IRMO Karonis, 296 Ill.App.3d 86 (2nd Dist. 1998), the Appellate Court found that the non-custodial parent’s statement of his income on a credit application of $110,000.00 impeached his testimony at the trial that his income was $13,000.00 (296 Ill.App.3d at 92). This finding allowed the court to set a reasonable amount of support under 750 ILCS 505.
In the past, Appellate Courts have approved the use of income averaging to arrive at a level dollar amount for support. In IRMO Freesen, 275 Ill.App.3d 97 (4th Dist. 1995), the court approved income averaging where income varied from year to year:
In most cases, going back beyond the current year in arriving at a net income figure will be confined largely to cases where the support-paying parent is self-employed. However, income averaging is not to be confined solely to such cases; it may be used in any case where appropriate. Here, for instance, even though O.R. is not self-employed, his income varied through the years by reason or the presence or absence of large bonuses.
Freesen, 275 Ill.App.3d at 104
The Freesen court went on to hold that in cases where income varied due to the presence or absence of large bonuses, it is error for the court to limit its consideration to income for one year (275 Ill.App.3d at 1040). In IRMO Schroeder, 215 Ill.App.3d 156 (4th Dist. 1991), however, the Appellate Court held that the trial court could abuse its discretion in averaging income. There the trial court was reversed for calculating net income using weighted six-year averages, the Appellate Court holding that data six years old cannot reflect the current circumstances of the parties.
After June 1, 2000, the necessity of income averaging in these cases will be greatly reduced by the use of percentage orders. Thus, where a payor’s income varies from year to year due to the earnings of commissions or bonuses, the court will have the power to express support in terms of either a level dollar amount plus a percentage of net income or as a straight percentage order. The court will still have to make an initial determination that net income is difficult to ascertain. Once that threshold is met, a percentage order or an order which combines a level dollar amount plus a percentage of additional income appears to be the fairest method to each party where the difficulty in ascertaining income is due to good faith uncertainty. However, where the difficulty is due to the credibility of the payor or the payor’s lack of good faith, the court may continue to set support at any amount it deems reasonable.
Joel D. Arnold is a 1973 graduate of The John Marshall Law School. He received his LLM in taxation from The John Marshall Law School in 1984. He is a partner at the law firm of Fortunato, Farrell, Davenport & Arnold, Ltd. of Westmont, Illinois, concentrating in Family Law.