Opinion ID: 2679983
Heading Depth: 2
Heading Rank: 2

Heading: Allocation of Tax Debts

Text: [¶19] Michael argues that the court erred when it effectively ordered him to pay Laurel’s future, nonmarital tax debt. We review the classification of debt as marital or nonmarital for clear error, the court’s allocation of responsibility for marital debt for an abuse of discretion, and its application of statutory law de novo. See Efstathiou, 2008 ME 145, ¶ 41, 956 A.2d 110; Hedges v. Pitcher, 2008 ME 55, ¶ 20, 942 A.2d 1217; Hess v. Hess, 2007 ME 82, ¶ 15, 927 A.2d 391. “We construe divorce judgments consistent with the intent of the divorce court,” as 5 Certain group health plans are obligated to make COBRA continuation coverage available to “qualified beneficiaries” when a “qualifying event” has occurred. 26 U.S.C.A. § 4980B(f) (West, Westlaw through P.L. 113-22 (excluding P.L. 113-14)); Treas. Reg. § 54.4980B-1, Q&A (1) (as amended in 2001). A person who was covered under a group health plan as the spouse of a covered employee on the day before a qualifying event is a “qualified beneficiary.” Treas. Reg. § 54.4980B-3, Q&A (1) (as amended in 2001). A divorce or legal separation of a covered employee from his or her spouse is a “qualifying event” if, under the terms of the plan, the divorce or legal separation causes the non-employee spouse to lose coverage under the plan. Treas. Reg. § 54.4980B-4, Q&A (1) (as amended in 2001). If coverage is eliminated in anticipation of the qualifying event, the elimination is disregarded in determining whether the qualifying event causes a loss of coverage. Id.; Rev. Rul. 2002-88, 2002-2 C.B. 995. We cannot determine whether the subsequent order making dissolution of the marriage final, or any subsequent marriage by Michael, may affect the capacity of the court on remand to order COBRA continuation coverage for Laurel. The court may have to resolve this issue on remand if the option of an order to provide COBRA continuation coverage is considered. Subject to other rules, a health insurance plan generally must make COBRA continuation coverage available for thirty-six months after the date of the divorce or legal separation. Treas. Reg. § 54.4980B-7, Q&A (1) & (4) (as amended in 2001); Rev. Rul. 2002-88, 2002-2 C.B. 995. Generally, and subject to the terms of the plan, notice of the qualifying event must be provided to the plan administrator within sixty days after the later of the date of the divorce or legal separation or the date the qualified beneficiary would lose coverage on account of the divorce or legal separation and timely election of coverage made. Treas. Reg. § 54.4980B-6, Q&A (1)-(3) (as amended in 2001). 10 revealed in the judgment’s language. Lewin v. Skehan, 2012 ME 31, ¶ 24, 39 A.3d 58. [¶20] In a divorce, the parties’ responsibility for marital debt is subject to allocation or division in accordance with 19-A M.R.S. § 953 (2012) in the same manner as marital property. Hess, 2007 ME 82, ¶ 15, 927 A.2d 391 (holding that “property, including marital debt,” is divided pursuant to section 953(1)). [¶21] The amended divorce judgment orders Michael to be “solely responsible for any and all debt and monies owed to the Internal Revenue Service for any and all previous, current or future tax years, free and clear of any responsibility of Laurel.” The divorce judgment can be read as making Michael solely and indefinitely responsible for paying Laurel’s post-divorce federal tax debts. Such an order would exceed the court’s statutory authority to allocate assignment of debt. See Laqualia, 2011 ME 114, ¶¶ 13, 15, 19, 30 A.3d 838.6 However, it is more likely that the court’s intent was only to ensure that Michael remained fully responsible for the tax debts for the 2009-2011 tax years that have not yet been finally paid. Such an order regarding the as-yet-unpaid tax liability 6 But see King, 2013 ME 56, ¶ 11 & n.2, 66 A.3d 593 (approving of a circumstance in which a court may award one party’s nonmarital property to the other spouse as reimbursement spousal support). 11 for tax years during the term of the parties’ marriage would be well within the court’s authority.7 [¶22] The court’s amended order does state, “All debts of the parties since the date of separation . . . shall be the responsibility of the party incurring said debt,” suggesting that indeed the court’s reference to future obligations means only those obligations arising for underpayment of taxes in tax years 2009-2011. On remand, the court should clarify the tax years to which it intended its order regarding tax payments to apply. The entry is: The portion of the judgment awarding spousal support, including health insurance coverage, and the portion of the judgment ordering payment of future tax debts is vacated and remanded for further proceedings or clarification consistent with this opinion. The remainder of the divorce judgment is affirmed. __________________________________ On the briefs: Joe Lewis, Esq., Port City Legal, Portland, for appellant Michael V. Finucan Laurel W. Finucan pro se appellee York District Court docket number FM-2011-106 FOR CLERKS REFERENCE ONLY 7 Any suggestion by Michael that he may not be responsible for debt incurred after the parties separated, but prior to the divorce, is unavailing. See Doucette v. Washburn, 2001 ME 38, ¶ 16 & n.10, 766 A.2d 578.