The facts of Heather Walker Sellers v. Billy Joe Walker are as follows: Heather (Mother) and Billy Joe (Father) were divorced on February 23, 2007. Two children were produced from their Alimonymarriage. At the time of the divorce, the children were four years old and two years old respectively. The parties entered into an agreed Permanent Parenting Plan (PPP) and Marital Dissolution Agreement. The PPP provided that Father would pay $800 per month in child support to Mother, which was a $21 upward deviation from the calculation reflected on the respective child support worksheet. According to the PPP, because Father was self- employed with fluctuating income, the parties agreed that Father’s income would be established at $9,750 per month, an amount the parties determined to be “fair and equitable.” The parties did not, however, consider Father’s payment of self-employment taxes.

Mother subsequently filed a petition seeking modification of the PPP and review of Father’s child support obligation. Mother sought review of the child support obligation due to Father’s fluctuating income and also because the children’s daycare expense had ended. Father filed a response and counter-petition requesting a review of his child support obligation, asserting that the obligation should be decreased and that his payment of self-employment taxes should be considered. By agreement, the parties resolved issues regarding co-parenting and entered into an amended PPP. The trial court approved the agreed, amended PPP, reserving the remaining issues of child support and court costs for a subsequent hearing.

The trial court conducted a hearing with testimony from both parties and Father’s accountant who testified that he prepared Father’s tax returns from information provided by Father regarding his gross sales for the year. The trial court found that Father’s income determination of $9,750 per month was a compromise between the parties because they had recognized that Father’s income fluctuated. The trial court determined instead that Father’s current income should be set based on the average of the total deposits to his personal bank account for the three years preceding the hearing. The trial court questioned Father’s testimony regarding his income because his bank deposits were sufficiently greater than his reported income or profit. Considering the evidence, the court thus determined Father’s income to be $8,080 per month, a reduction from his income in 2007. The court set Mother‟s income at $300 per week and the resultant child support award at $1,073 per month.

Father subsequently filed a motion to alter or amend the judgment, asserting that his income was calculated incorrectly because several deposits to his personal bank account were derived from sources other than the business. Father maintained that Mother’s income should have been set at a higher amount. Father also contended that his payment of the children’s health insurance premiums was not considered in the child support calculation. Alternatively, Father argued that the trial court should not have modified child support because Mother’s attorney conceded at the outset of the hearing that there was no significant variance.

The trial court entered an order regarding these motions finding that the parties did agree during the hearing that Father’s payment of health insurance premiums should be included in the calculation, but the court did not adjust its determination of Father’s income. The court stated that while Mother did not request an increase in support, “once child support becomes an issue, the court is under an obligation to set child support at the appropriate amount.” The trial court also found that Mother should receive retroactive child support but did not make any specific monetary awards. Mother subsequently sought a garnishment for the retroactive child support award for which Father filed a motion to stay the garnishment. The trial court entered an order staying the garnishment setting child support at $1,017 per month based upon a child support worksheet prepared by Father that included his payment of health insurance premiums, and setting the amount of Father‟s arrearage.

Father appealed to the Court of Appeals of Tennessee At Knoxville seeking review of the the following:

  1. Whether the trial court erred in its calculation of Father’s child support obligation by improperly determining the amount of Father’s income.
  2. Whether the trial court erred in its calculation of Father’s child support obligation by failing to consider Father’s self- employment taxes.
  3. Whether the trial court erred in its calculation of Father’s child support obligation by improperly determining the amount of Mother’s income.

Upon review, the Appellate Court affirmed the trial court’s determination of Mother’s income, as well as the trial court’s determination that Father’s income should be based on the amount of the deposits to his personal bank account. The Court reversed the trial court’s computation of Father’s monthly income finding that the correct amount of his monthly income to be $9,463. The Court further remanded the case for recalculation of Father’s child support obligation utilizing the amount of $9,463 as Father’s monthly income and also taking into consideration the amount of self-employment taxes paid by Father.

If you have reason to believe your former spouse is not paying his or her fair share of child support based on inaccurately reported income you should seek the services of an experienced family law attorney. Contact Donna Wagner for a consultation.