The Journal of The DuPage County Bar Association

Back Issues > Vol. 29 (2016-17)

Illinois July 1, 2017 Income Sharing Amendments and the Sea Change in the Law Regarding Imputed Income and Child Care
By Gunnar Gitlin

The first significant amendment to the Illinois child support statute became law in 1985 with the passage of the Illinois minimum child support guidelines. This year, more than three decades later, Illinois comprehensively changes from the outdated simple percentage of the obligor’s income model to an “income shares” model. This was ultimately a result of the required quadrennial review process and as an offshoot to the work of the Family Law Study Committee. More specifically, the work was the result of the Child Support Advisory Committee. 1 This committee included DuPage County family law attorney Margaret Bennett, the Honorable Pamela Loza, and other individuals and groups responsible for input on this critical legislation. As a result of this committee’s work with the input of the Family Law Study Committee, Illinois in 2016 (effective July 1, 2017) adopted our “income shares” model.2 Accordingly, on the heels first of the Illinois maintenance guidelines, and then the rewrite of all other aspects of Illinois family law other than child support, 2017 will bring us a rewrite of the critical provisions of our child support guidelines. Starting in 2017 Illinois family law will be radically different than it was in 2015 as regards child support and child expense calculations, and method of payment.

Although the simple percentage of the obligor’s income and income shares yields similar results for most families, for certain families (primarily families where the parents incomes are very different), the results using an “income shares” model are radically different.

This article addresses two of the more dramatic changes to how Illinois will handle child support commencing July 1, 2017 with the income sharing amendments: imputing income to the unemployed or underemployed parent and payment of child care expenses. It will not address the important issue of the perceived deficit with Illinois’ historical percentage of the obligor’s income model that Illinois has used does not provide guidance about adjustments when parents each have a significant amount of parenting time – often called “shared parenting” or under the former lexicon “joint physical custody.” Nor will this article focus on the fact that the percentage of the obligor’s income model did not generally provide for consideration of families where one or both parents had unusually high or unusually low incomes, although this is ostensibly addressed in the income sharing model.

To understand Illinois’ “income shares” model generally, keep in mind that it uses a table. The table is based upon economic data that determines how much the parents who reside together spend on their children considering the combined family income and the size of the family. It is anticipated that the worksheets, etc., will be available in February 2017.

Practice Tips. To see how Illinois child support guidelines differ from the guidelines in other states see: http://www.ncsl.org/research/ human-services/guideline-models-by-state.aspx; In 2016, Illinois had been one of only eight states following the percentage of obligor’s income model.; Illinois enact Pub. Act 99-0764 (eff. Jul 1, 2017). Be aware of the impact on existing cases given the effective date of July 1, 2017.3 ; Illinois most closely conforms to the Iowa income sharing model because that model follows a net income model and Illinois follows what could be called a permissive net income model. See: https://secureapp.dhs.state.ia.us/CustomerWeb/Resources/SupportGuidelines/Court%20Rules.pdf. As an aside, this author likes the Iowa model better in that it did not adopt the sharp demarcation point of 146 overnights but allowed a variable credit of starting with 128 overnights and a 15% credit.

The child support provisions provide a sea change in Illinois law and it is critical that Illinois family lawyers understand the potential impact of these changes.

Imputing Income to the Unemployed or Underemployed Parent. Even following the effective date of income sharing amendments, §505(a)(5) of the IMDMA4 continues to provide, “If the net income [of the child support obligor] cannot be determined because of default or any other reason, the court shall order support in an amount considered reasonable in the particular case.” Pub. Act 99-0764 (eff. July 1, 2017)5 adds the following section to Section 505(a) of the IMDMA:

 (3.2) Unemployment or underemployment. If a parent is voluntarily unemployed or underemployed, child support shall be calculated based on a determination of potential income. A determination of potential income shall be made by determining employment potential and probable earnings level based on the obligor’s work history, occupational qualifications, prevailing job opportunities, the ownership by a parent of a substantial non-income producing asset, and earnings levels in the community. If there is insufficient work history to determine employment potential and probable earnings level, there shall be a rebuttable presumption that the parent’s potential income is 75% of the most recent United States Department of Health and Human Services Federal Poverty Guidelines for a family of one person.6

The language of Section 505(a)(3.2) represents a paradigm shift in the law regarding child support, especially given the changes to the law regarding the 2016 re-write of the remainder of the IMDMA. There are a series of critical clauses within Section 3.2. These include: The applicability of the law to both unemployment as well as “underemployment.” Previously, Section 505.1 had only referred to the duty of one who was “unemployed” and requiring that person to “seek employment and report periodically to the court…” As will be discussed below, it was case law that had fleshed out the ability of the court to impute income generally to an underemployed individual. While a number of cases addressed the unemployed obligors with a duty of support, the statutory law literally did not allow the court to impute income to an under-employed obligor. The result was that courts would often find that the net income in such situations could not be determined based upon the language of Section 505(a)(5) and then the court consistent with that would order support in “an amount considered reasonable in a particular case.” The other result was the expansion (and in many cases unwarranted expansion) of what could be considered income when dealing with underemployed individuals.; “Potential Income” is based upon “determining employment potential and probable earnings level based on the obligor’s work history, occupational qualifications, prevailing job opportunities, the ownership by a parent of a substantial non-income producing asset, and earnings levels in the community.”7 It is suggested that the probable earnings level cannot be the actual probable level for the hypothetical probable level – under the assumption that the individual would not be underemployed. The focus on work history may lead back to a re-examination of setting child support based upon an income averaging approach and it is quite possible that what has been outlined as a virtual three year may substantially vary in practice when considering potential income.; The clause regarding “ownership by a parent of a substantial non-income producing asset” also represents a sea change in the law regarding consideration of potential income. While theoretically, one could argue that a substantial non-income producing asset should result in imputing income, this was generally a difficult battle in practice. No longer will that be the case due to the specific statutory authority in this regard. Keep in mind that the original recommendation by the Family Law Study Committee did not include this phrase.8 The clauses “prevailing job opportunities” and “earnings levels in the community” will present both difficulties and opportunities in terms of proofs in appropriate cases.

Direct Payment Via Support Orders of Child Care Expenses. Section 505(a)2.5 through to July 1, 2017,9 has provided:

(2.5) The court, in its discretion, in addition to setting child support pursuant to the guidelines and factors, may order either or both parents owing a duty of support to a child of the marriage to contribute to the following expenses, if determined by the court to be reasonable: (a) health needs not covered by insurance;

(b) child care;
(c) education; and
(d) extracurricular activities.10

Effective July 1, 2017, this is amended to read:

(3.6) Extracurricular activities and school expenses. The court, in its discretion, in addition to the basic child support obligation, may order either or both parents owing a duty of support to the child to contribute to the reasonable school and extracurricular activity expenses incurred which are intended to enhance the educational, athletic, social, or cultural development of the child.

(3.7) Child care expenses. The court, in its discretion, in addition to the basic child support obligation, may order either or both parents owing a duty of support to the child to contribute to the reasonable child care expenses of the child. The child care expenses shall be made payable directly to a party or directly to the child care provider at the time of services.

(A) As used in this paragraph (3.7), “child care expenses” means actual annualized monthly child care expenses reasonably necessary to enable a parent or non-parent custodian to be employed, attend education and training activities, or job search, and includes after-school care and all work-related child care expenses incurred while receiving education or training to improve employment opportunities. “Child care expenses” includes deposits for the retention of securing placement in child care programs. “Child care expenses” may include camps when school is not in session. Parties may agree on additional day camps. Child care expenses due to a child’s special needs shall be a consideration in determining reasonable child care expenses for a child with special needs.

(B) Child care expenses shall be calculated as set forth in this paragraph. Child care expenses shall be prorated in proportion to each parent’s percentage share of combined parental net income, and added to the basic child support obligation. The obligor’s portion of actual child care expenses shall appear in the support order. The obligee’s share of child care expenses shall be paid by the oblige directly to the child care provider.

(C) The amount of child care expenses shall be adequate to obtain reasonable and necessary child care. The family’s actual child care expenses shall be used to calculate the child care expense contributions, if available. When actual child care expenses vary, the actual child care expenses shall be averaged over the most recent 12-month period. When the parent is temporarily unemployed or temporarily not attending school, then child care expenses shall be based upon prospective expenses to be incurred upon return to employment.

(D) An order for child care expenses may be modified upon a showing of a substantial change in circumstances. Persons incurring child care expenses shall notify the obligor within 14 days of any change in the amount of child care expenses that would affect the annualized child care amount as determined in the support order.11

Child Care Expenses. The overall philosophy behind the child care expense amendments as part of the income sharing model was that, notwithstanding an agreement between the parents or the court’s discretion, child care expenses must now be included in the child support order. They must also be paid by the same method as payment of child support. The critical language provides, “The obligor’s portion of actual child care expenses shall appear in the support order. The obligee’s share of child care expenses shall be paid by the obligee directly to the child care provider.” The obligor directly pays the recipient as part of the support order and the recipient directly pays the provider. Therefore, child care provisions would be subject to the same support enforcement remedies as provided in the IMDMA and elsewhere.12

The way the child care provisions work in practice is that the child care expenses are averaged over the course of a year to determine a monthly amount, and prorated in proportion to each parent’s percentage share of combined parental adjusted gross income, and added to the basic child support obligation as a line item adjustment. The obligor’s net portion of actual child care expenses shall appear in the support order as a child care support obligation to be paid. The obligee’s share of child care expenses is directly contributed as expenses have occurred.

Practice Tips. The problem with the income sharing model as adopted in Illinois is that, in practice, it may prove to be unrealistic in a number of cases given the highly variable nature of these expenses. Child care will vary from year to year based upon number of factors. Projecting this amount over the course of a year and then averaging it serves to promote a finite number but does so as at the expense of creating an amount that is equitable in the sense of being based upon the actual expenses then being incurred. The caveat to this is the last sentence that reads, “Persons incurring child care expenses shall notify the obligor within 14 days of any change in the amount of child care expenses that would affect the annualized child care amount as determined in the support order.” Good drafting of a settlement agreement or the like would tie in the obligation to notify the obligor within that 14-day period with the right to seek a retroactive reduction in an appropriate case. Another mainstream concern when determining child care expenses is the highly variable nature of summer camps because they often substitute for child care expenses. This is a reason for the language, “’Child care expenses’ may include camps when school is not in session. Parties may agree on additional day camps.” But considering such camps as part of explicit support order that is supposed to be annualized will present difficulties. Again, language should be adopted in the settlement agreement or agreed order in appropriate cases to address the day camp issue its impact in practice. Note that, “Overnight camps, summer school, or tutoring programs” were deliberately not included in this regard.13

The commentary regarding the 2012 draft legislation of what was ultimately approved had stated, “Child care expenses to not include: amounts paid by subsidies received through a private plan provided by an employer or insurance policy, reimbursements, any credit (including the federal child care tax credit), or payments [required] to retain a space for the child.14

Conclusion. As of July 1, 2017, Illinois family law will be radically changed as compared to the history of Illinois law under our earlier child support guidelines. Two of these most important changes involve the underemployed and unemployed parent as well as how Illinois will handle child care expenses. Illinois family lawyers need to understand that the changes to the statute themselves will not represent a substantial change in circumstances sufficient to modify earlier support awards. But understanding this last critical piece of the changes to the family law puzzle are critical to the Illinois lawyer practicing in the area of family law.

1. See: https://www.illinois.gov/hfs/ChildSupport/About/AdvisoryCommittee/Pages/default.aspx (last visited January 2, 2017).
2. As stated in the 2012 white paper regarding the income shares proposed draft legislation, “The committee coordinated with the Illinois Family-Law Study Committee that was formed in 2008…and had a much broader charge.” See “Rough Draft proposal to Adopt the Illinois Income Shares Model for the Illinois Child Support Guidelines – May 16, 2012”: https://www.illinois.gov/hfs/ChildSupport/Documents/070912incomeshares.pdf (last visited January 2, 2017)
3. Pub. Act 99-0764 (eff. July 1, 2017) (See Senate Amendment No. 1 that provided the effective date of July 1, 2017 (a delayed effective date) to allow additional time for the anticipated technical corrections amendments and further education of Illinois lawyers regarding the wholesale changes).
4. 750 ILCS 5/505(a)(5).
5. Pub. Act 99-0764 (eff. July 1, 2017).
6. The Federal Poverty Guidelines can be found at: https://aspe.hhs.gov/poverty-guidelines (last visited June 8, 2016). See the chart for a family of one for the 48 contiguous states and the District of Columbia.
7. Consider the language of another state’s income sharing model that with substantially similar language. See, Oregon, 137-050-0715(3). It defines potential income as, “parent’s ability to earn based on relevant work history, including hours typically worked by or available to the parent, occupational qualifications, education, physical and mental health, employment potential in light of prevailing job opportunities and earnings levels in the community, and any other relevant factors.” The commentary is interesting where it states: Commentary: Some employers will not allow an employee to work a full 40-hour week, which may not be customary to the occupation, but is customary to the employer. In these types of circumstances, the fact-finder must determine whether to base the parent’s earning ability on a regular 40-hour workweek, the customary work schedule for the parent’s occupation, or work opportunities in the parent’s current employment situation. Example: A parent works 32 hours per week at a restaurant. Additional hours are unavailable. Other employment opportunities in the area for which the parent is qualified offer similar hours and wages. It would be inappropriate to base the parent’s income on a 40-hour work week. Other parents may have suffered reduced earning ability. For example, it would be inappropriate to attribute historical full-time income to a public school teacher who has been laid off and now works part-time as a substitute teacher – assuming there are limited employment opportunities in the area for a teacher of those credentials and work history. On the other hand, it might be appropriate to attribute income based on historical earnings to a person who has left a lucrative professional career because, for example, a spouse earns sufficient income, or in order to work in a preferred field but at a lower rate of pay. Because the goal is to determine earning ability, this imputation should not simply apply the amount formerly earned. The review should include consideration of the currently available employment opportunities in that field in the parent’s area, the condition of the parent’s professional skills and/or equipment, and the time since the parent last worked in that occupation. This provision also contemplates seasonal employment. A seasonally employed parent may have significant earnings for a portion of the year and then receive unemployment compensation for a portion of the year. Under those circumstances, the parent’s earning ability might be based on an annual review of their income, divided over a twelve-month period.
8. See “Rough Draft proposal to Adopt the Illinois Income Shares Model for the Illinois Child Support Guidelines – May 16, 2012”: https://www.illinois.gov/hfs/ChildSupport/Documents/070912incomeshares.pdf (last visited January 2, 2017).
9. Pub. Act 99-0764 (eff. July 1, 2017).
10. 750 ILCS 5/505(a)(2.5), effective January 2, 2013. This was part of P.A. 97-941 that had included a number of other smaller changes to Section 505 including but not limited to adding mental needs of the child to those list of statutory factors in Section 505(a)(2) and providing greater emphasis to the educational expenses for a child by the additional of the word “educational” to the previous list of needs to be considered in setting child support which had included, “physical, mental and emotional health needs.”
11. Pub. Act 99-0764 (eff. July 1, 2017).
12. See: https://www.illinois.gov/hfs/ChildSupport/Documents/070912incomeshares.pdf (last visited January 2, 2017), p. 8. Rough Draft proposal to Adopt the Illinois Income Shares Model for the Illinois Child Support Guidelines – May 16, 2012”.
13. See: https://www.illinois.gov/hfs/ChildSupport/Documents/070912incomeshares.pdf (last visited January 2, 2017), p. 10. Rough Draft proposal to Adopt the Illinois Income Shares Model for the Illinois Child Support Guidelines – May 16, 2012”.
14. See: https://www.illinois.gov/hfs/ChildSupport/Documents/070912incomeshares.pdf (last visited January 2, 2017), p. 8. Rough Draft proposal to Adopt the Illinois Income Shares Model for the Illinois Child Support Guidelines – May 16, 2012”

Gunnar J. Gitlin, Principal, The Gitlin Law Firm, P.C., in Woodstock. The firm exclusively practices family law. Gunnar is an AAML Fellow, listed with Best Lawyers in America and as an Illinois Leading Lawyer and Super Lawyer. In 2016, Gunnar rewrote his father’s book Gitlin on Divorce: A Guide to Illinois Matrimonial Law available through Lexis.

 
 
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