Below is a recent communication from the Second District court commissioners regarding the division of COVID-19 stimulus checks. While the communication is from the Second District, district court commissioners generally take similar positions.
COVID-19 STIMULUS FUNDS
As parties have begun receiving money pursuant to the federal stimulus package, questions are coming in regarding the court’s position on whether these funds should be divided and, if so, how. The court must be cognizant at all times of offering advisory opinions on issues that are not before the court, which would be expressly prohibited by the Code of Judicial Conduct. However, in our ongoing effort to assist parties and practitioners, the following information is provided. Thanks must be given at this point to Commissioner Morgan, who did extensive research on the issue and was able to rely on his background as a former employee of the IRS.
Put simply, in the majority of cases the federal stimulus money is not free money. It is a credit against taxes that might be owed in 2020; it’s simply being given early in an effort to stimulate the economy. This is pursuant to the new section 6428 of the tax code, which specifically says, “there shall be allowed as a credit against tax imposed . . . for the first taxable year beginning in 2020 . . . .” As of now, the IRS hasn’t promulgated rules regarding 2020 taxes and how this payment would be taken into account.
We also must consider the fact that the tax credit’s payment will be based on either a party’s 2018 or 2019 tax filing, depending on whether the party in question has filed their 2019 taxes. Both the tax code and Utah’s statutes contain various provisions regarding eligibility to claim children for tax purposes. This means that the tax credit will be paid depending on the vagaries of the parties’ individual orders, being current in support obligations, and other statutory provisions.
The bottom line is that the determination of who got the money in the first place, as determined by the IRS, is based on multiple complex factors. Given that the money is merely a credit towards a party’s future tax obligation, we would be reluctant to reallocate the funds in some different manner. People who merely view the funds as “free money” may feel this is unfair, particularly if a non-custodial parent receives the $500 per child because 2019 was their turn to claim the child(ren). If anyone claimed the child(ren) who didn’t have the right to may be addressed during the normal enforcement proceedings. Otherwise, the money received is that party’s own money, just paid now rather than via lessening of their 2020 tax obligation.
We wish all of you our best and hope that this is helpful.
Commissioner Catherine S. Conklin
Commissioner Christina L. Wilson
Commissioner T.R. Morgan