July 8, 2015 § 2 Comments
If you practice law in or around Biloxi, Columbus, Meridian, or any locale where military are among your clientele, you are no doubt acquainted with the concepts of BAH and BAS.
BAH is military-ese for Basic Allowance for Housing, and BAS is the acronym for Basic Allowance for Sustenance (i.e., groceries).
The question whether BAH and BAS should be included in income for calculation of child support has often percolated up in chancery court, and the answer has varied. Some of the confusion, perhaps has been due to the fact that BAH and BAS are not included in taxable income. The COA confronted the issue in a recent case.
In Price v. Snowden, Tim Snowden had agreed to pay 14% of his adjusted gross income (AGI) to Donna Price as child support for a child he had fathered outside marriage. When it came time to pay, Tim did not include BAH and BAS in his income for calculation of child support, apparently on advice of a CPA and after consultation with DHS. Donna sued for contempt based on underpayment. Tim took the position that BAH and BAS were not includable in his income for child support purposes.
In a decision handed down June 30, 2015, Judge Griffis wrote for the court:
¶10. Donna claims that Tim has underpaid his child-support obligation. The child-support order provides that “[Tim] will pay [Donna] child support based upon [f]ourteen [p]er[c]ent (14%) of his adjusted gross income pursuant to statutory guidelines.” The order also provides that this amount is to be adjusted annually.
¶11. We begin with the child-support guidelines. Mississippi Code Annotated section 43-19-101(3)(a) (Supp. 2014) provides that “gross income” includes the following:
[G]ross income from all potential sources that may reasonably be expected to be available to the absent parent including, but not limited to, the following: wages and salary income; income from self-employment; income from commissions; income from investments, including dividends, interest income and income on any trust account or property; [the] absent parent’s portion of any joint income of both parents; workers’ compensation, disability, unemployment, annuity and retirement benefits, including an Individual Retirement Account (IRA); any other payments made by any person, private entity, federal or state government or any unit of local government; alimony; any income earned from an interest in or from inherited property; any other form of earned income; and gross income shall exclude any monetary benefits derived from a second household, such as income of the absent parent’s current spouse[.] (Emphasis added).
¶12. When the original order was entered in 2004, Tim was an officer of the United States Navy. Tim received nontaxable federal payments for basic allowable housing (BAH) and basic allowable subsistence (BAS). Tim testified that his attorneys told him to rely on his mother-in-law, acting as his tax accountant, to calculate his monthly child-support obligation. His mother-in-law claimed she read the statute and “double-checked” with social services to determine that child-support calculations were to be based solely on taxable income.
¶13. Here, Donna and Tim agreed to an escalation clause to determine the appropriate amount of child support. Previously, this Court noted that “[t]he parties may in fact agree of their own volition to do more than the law requires of them. Where such a valid agreement is made, it may be enforced just as any other contract.” Stigler v. Stigler, 48 So.3d 547, 551 (¶9) (Miss. Ct. App. 2009) (internal citations omitted). Here, Donna and Tim both agreed to the escalation clause as written. Tim has not contested the validity or enforceability of the clause in this action. Thus, it is a valid clause in their agreement.
¶14. In Bustin v. Bustin, 806 So. 2d 1136, 1139 (¶8) (Miss. Ct. App. 2001), this Court considered the language “any other form of earned income” in section 43-19-101(3)(a), containing the provisions commonly referred to as the child-support guidelines. Sue and William Bustin were divorced, and William was ordered to pay child support for two children at the statutory amount of twenty percent of his gross income. Id. at 1137 (¶2). After the divorce, William was promoted to be the pastor at his church, and was given a housing allowance of $1,500 per month. Id. William brought a motion to modify his child support obligation, for contempt, and for sanctions, while Sue responded with her own motion to modify. Id. at (¶3). The chancellor determined that William’s housing allowance should be included in the calculation of his gross income. Id. at (¶1). This Court held:
It appears from a plain reading of the text that the statute addresses the issue of income and what is included when tabulating child support. The phrase “any other form of earned income” would seem to include items in a person’s salary package. William is given that housing allowance as part of his salary from the church. If William went to a bank tomorrow and applied for a loan, he would most definitely list his housing allowance as income in order to show that he would be able to repay his loan. Salary from one’s employer is one of the key elements when estimating everything from income taxes to interest rates on a bank loan.
Moreover, computing one’s income for taxation is different than computing one’s income for child[-]support purposes. Our state must protect the best interests of the child. One of the ways Mississippi accomplishes that goal is child[-]support enforcement through statutes. Our statutes delineate what is to be considered as gross income for the purposes of computing child support. This issue is also without merit.
Id. at 1140 (¶¶10-11).
¶15. Quite frankly, this interpretation of section 43-19-101(3)(a) leads to a logical result. Uniform Chancery Court Rule 8.05(a) requires the parties to file a “detailed written statement of actual income and expenses.” The Rule 8.05 form provides for the detail of income and expense. Income is to be disclosed in section 2. Line 13, “Present Monthly Gross Income,” requires the disclosure of “[m]onthly reimbursed expenses and in-kind payments to the extent that they reduce personal living expenses such as cars, travel, gas, phone, etc.” This amount is included in the calculation for the chancellor to determine gross income. Similarly, the Rule 8.05 form provides for the expense to be deducted. Section 3, “Monthly Expenses,” requires a party to disclose “[m]onthly mortgage or rent payments.”
¶16. We find that Tim’s BAH and BAS payments are a “form of earned income” under section 43-19-101(3)(a). The United States Navy paid Tim additional income for his housing and subsistence, and these payments were earned by Tim and assisted him with the payment of his monthly expenses.
That settles that. BAH and BAS must be included in AGI for calculation of child support. That’s going to smart some for the payor, because BAH and BAS are gross sums from which no taxes are deducted. And it’s a nice development for the payee, because it’s going to result in a bigger sum of child support. For lawyers, it answers a question that has heretofore gone unanswered in Mississippi case law.
A few morsels for thought:
- At Meridian Naval Air Station, two student pilots, A and B, both apply for on-base housing the same day. Pilot A is assigned the last available base house; he gets no BAS or BAH. Pilot B has no choice but to live off-base due to the unavailability of base housing, and he receives BAS and BAH as a result. Both would pay substantially different amounts in child support. Fair?
- Pilot B does not pocket the BAH. He pays all of it and some from his own pocket to rent a house in Meridian. Yet he will be taxed 14% + in child support on that amount. It is a legitimate point that not everyone gets their housing paid by their employer, but the fact is that people enlisting in the military do so with the understanding that, in return for generally lower pay than in the private sector, they will be provided with amenities such as housing.
- Pilot A will receive free housing and meals, yet the value of that will not show up on his paycheck stub or on his tax return so it can be quantified for child support calculation. Fair?
- Both pilots A and B have their groceries subsidized at the base commissary. That benefit does not show up on a pay stub or tax return, yet it can amount to thousands of dollars a year, and it escapes child support calculation. Fair?
I don’t have any answers to those questions. I’m just laying the groundwork for someone else’s appeal, I guess.
I deeply appreciate the thoughtfulness. I consider the unreported benefits (subsidized housing) to be in the same category as vehicles provided by employer. It has the effectof enhancing ability to pay.
Although I agree with the interpretation, it ultimate leads to disparate results for the service member. BAH is not static. It fluctuates based on where the service members duty station is located, similar to a cost of living allowance. A service member stationed in MS may benefit from a lower BAH than say San Diego, CA, but what about a service member stationed in San Diego, CA that is subject to MS jurisdiction? The difference in BAH is significant. 14% based on a higher BAH could create a financial hardship on the service member if s/he moves to a location with lower BAH. Is the service member required to file a petition everytime s/he moves to have the Child support adjusted? I have advocated using the table used by DFAS to describe benefits and pay listed by paygrade. Although this chart’s BAH is an average for the paygrade, using it does not result in a lopsided award of child support for service members stationed in location with high BAH.