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COURT OF APPEALS DECISION DATED AND RELEASED September 6, 1995 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0661
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
IN RE THE PATERNITY OF
JORDAN A. F.:
STATE OF WISCONSIN,
Petitioner-Appellant,
v.
LARRY W. W.,
Respondent-Respondent.
APPEAL from an order of
the circuit court for Door County:
JOHN D. KOEHN, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
MYSE, J. The State of Wisconsin
appeals a child support order that established child support after excluding
certain military entitlements received by Larry W. W., the adjudicated father
of Jordan A. F. The State contends that
the trial court erred when it excluded certain military entitlements from Larry
W.'s gross income for the purpose of calculating child support payments. Because we conclude that these military
entitlements were not within the definition of gross income as that term was
defined by the Department of Health and Social Services at the time of the
court's order, we affirm the trial court.
Larry W. is currently a
member of the armed forces and receives in addition to his military pay certain
military entitlements such as basic allowance for quarters, which is an
allowance for housing; basic allowance for subsistence, which is an allowance
for off-base meals; and variable housing allowance, which is an allowance to
offset the high cost of living and is adjusted depending on the location of the
base to which Larry is assigned.
In this action, Larry
was adjudicated the father of Jordan A. F. and was directed to pay 17% of his
gross income as child support, totaling $320 per month. In determining Larry's gross income, the
trial court excluded his military allowances.
The sole issue presented
is whether the definition of gross income in Wis.
Admin. Code § HSS 80.02(12) (August 1987), included Larry's military
allowances. The interpretation of ch. HSS 80 in determining child support
presents a question of law that we determine without deference to the trial
court. Gohde v. Gohde,
181 Wis.2d 770, 774, 512 N.W.2d 199, 201 (Ct. App. 1993).
Section 46.25(9)(a), Stats., requires the Department of
Health and Social Services to adopt and publish standards for courts to use in
determining child support obligations.
The department defined gross income for the purpose of calculating child
support obligations in Wis. Admin. Code
§ HSS 80.02(12), as follows:
"Gross
income" means all income as defined under 26 C.F.R. 1.61-1 that is derived
from any source and realized in any form, whether money, property or services,
and whether reported as total income on the payer's federal tax return or
exempt from being taxed under federal law.
Under
the department's definition, we must examine the definition of gross income
established by 26 C.F.R. § 1.61-1 (1995).
That regulation defines gross income as follows: "Gross
income means all income from whatever source derived, unless excluded by
law." The source of this
definition is the Department of Treasury, which defined gross income for
internal revenue purposes. Therefore,
we look to the Internal Revenue Code to determine whether the allowances in
question are "gross income."
If there is no exclusion from gross income in the Internal Revenue Code,
the allowances fit the definition of income as defined by the Department of
Health and Social Services. If,
however, the allowances are excluded from gross income by the Internal Revenue
Code, they do not fit the definition of gross income established by § HSS
80.02.
In the Internal Revenue
Code, I.R.C. § 134(a), (West Supp. 1995), provides: "Gross income shall not include any
qualified military benefit."
I.R.C. § 134(b), defines qualified military benefit as:
(1) ... any allowance or in-kind
benefit ... which—
(A) is received by any member or
former member of the uniformed services of the United States ... and
(B)
was excludable from gross income on September 9, 1986, under any provision of
law, regulation, or administrative practice which was in effect on such date
(other than a provision of this title).
To
determine whether the military benefits received by Larry were excluded from
gross income under the regulations as of September 9, 1986, we examine 26
C.F.R. 1.61-2(b) (1986). This section
provides: "[s]ubsistence and
uniform allowances granted commissioned officers, chief warrant officers,
warrant officers, and enlisted personnel of the Armed Forces ... and amounts
received by them as commutation of quarters, are to be excluded from gross
income." Because Larry's military
allowances are for subsistence and quarters, they fall under the regulation and
therefore are excluded from gross income under I.R.C. § 134.
Because I.R.C. § 134
excludes from gross income the type of military benefits at issue here, the benefits
are excluded under the definition of gross income in C.F.R. 1.61‑1. We therefore conclude that the military
benefits in question are not included as gross income for the purpose of
calculating child support under the law of the state of Wisconsin as it existed
at the time of this determination.
The State argues that § HSS 80.02(12), states that gross
income includes all income whether taxable or not and therefore it does not
matter if the benefits were excluded from gross income by the Internal Revenue
Code. The State relies on the
language: "whether reported as
total income on the payer's federal tax return or exempt from being taxed under
federal law." "Whether
reported as total income on the payer's federal tax return" refers to the
fact that it does not matter if the taxpayer actually included the income on
his tax return or not; if it fits the definition in 1.61-1, it is included in
gross income. The phrase "or
exempt from being taxed under federal law" refers to adjustments to gross
income which are not taxed. The amount
that is untaxed is still included in gross income for child support
purposes. Therefore, this additional
language in § HSS 80.02 does not
make the definition of gross income in §
HSS 80.02 different than the definition in 1.61-1. This conclusion is supported by Grohmann
v. Grohmann, 189 Wis.2d 532, 538, 525 N.W.2d 261, 263 (1995)
(interpreting gross income under Wis.
Admin. Code § HSS 80.02(12) to include income from trusts). In Grohmann, the supreme court
held that the definitions of gross income in §
HSS 80.02(12) and 26 C.F.R. 1.61-1 are synonymous and that it would be
illogical for the two sections to have different meanings. Id.
The State further argues
that the Department of Health and Social Services intended to include military
benefits as gross income for purposes of calculating child support because § HSS 80.02 has been amended
to specifically include military allowances and veterans benefits as of March
1995. We cannot speculate on the intent
of the department if the administrative rules expressing that intent are clear
and unambiguous. In re J.A.L.,
162 Wis.2d 940, 962, 471 N.W.2d 493, 502 (1991); see Basinas v.
State, 104 Wis.2d 539, 546, 312 N.W.2d 483, 486 (1981) (construction of
administrative rules is governed by same principles that apply to
statutes). We may not look beyond the
clear provisions of unambiguous statutes and administrative rules to determine
the intent of the department because it is presumed that the language itself
accurately reflects the intent. J.A.L.,
162 Wis.2d at 962, 471 N.W.2d at 502.
In this case, the
definition of gross income in § HSS
80.02(12) is very specific and incorporates that definition reflected by C.F.R.
1.61-1. The relevant provisions of
C.F.R. and I.R.C. § 134 are also unambiguous.
Because the military benefits in question are excluded from gross income
under the provisions of the Internal Revenue Code, they are not gross income
under the clear and unambiguous provisions of ch. HSS 80.
The State further argues
that the majority of the seven states that have addressed this issue have
resolved the issue in favor of including such entitlements as part of gross
income for the purpose of determining child support. The conclusion reached by courts of other jurisdictions dealing
with definitions other than those applicable in the State of Wisconsin are not
persuasive precedent. Each state has
its own definition and we are required to apply the definition adopted by the
State of Wisconsin. Because Wisconsin's
definition is clear and unambiguous, we cannot look to the conclusions that
other states applying different definitions have made concerning this issue.
We note that in March
1995, the department amended the definition of gross income to include military
allowances and veteran's benefits.
Although the issue of what military allowances encompass is not before
us, we note the change in law for the purpose of calling attention to the fact
that the definition contained in the administrative code at the time of this
order has been altered.[1] Accordingly, this case is not authority on
whether these types of military entitlements are included as gross income for
the purpose of determining child support as of March 1995.
By the Court.—Order
affirmed.
Not recommended for
publication in the official reports.