Under the previous law, a problem arose regarding income tax dependency exemptions because there was a lack of specific statutory authority for allocating exemptions between parents. There was also a lack of standards to use when allocating dependency exemptions.
This problem was highlighted by a federal case, Armstrong v. Commissioner of Internal Revenue, 745 F.3d 890 (8th Cir. 2014), which held that the non-physical custodian of a child cannot rely on a court order to show that party’s right to claim the dependency exemption. Instead, the party needs to submit Form 8332 as executed by the custodial parent.
The new law addresses this problem in Minnesota Statute § 518A.38, subdivision 7, by providing authorization and standards for allocating dependency exemptions.
Additionally, the new law authorizes the placement of conditions upon an award, authorizes modifications of an award, and provides sanctions for the wrongful claiming of an exemption or wrongful refusal to execute Form 8332.