APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF LORAIN, OHIO CASE No. 10 DU 072427
GINO PULITO, Attorney at Law, for Appellant.
JOAN JACOB THOMAS, Attorney at Law, for Appellee.
DECISION AND JOURNAL ENTRY
(¶1} Steven Kokoski appeals a judgment entry for divorce from the Domestic Relations Division of the Lorain County Court of Common Pleas. For the following reasons, this Court affirms in part and reverses in part.
(¶2} Steven and Susan Kokoski married in 1985. They have three children, but only one is still a minor. Husband is a partner in a construction company with his two brothers. Wife is a medical transcriptionist who works from home. She also works at a fitness center.
(¶3} In July 2010, Wife filed for divorce. Following trial, the court, for the most part, divided all of their debts and assets evenly. It found, however, that their house was Husband's separate property and that Wife was entitled to only part of the equity that had accrued during the marriage. It also ordered Husband to pay all of their federal tax debt because he had not properly submitted his self-employment social security taxes and had not filed their tax returns on time. It further made Wife residential parent of the minor child, and ordered Husband to pay child and spousal support. Husband has appealed, assigning three errors.
ASSIGNMENT OF ERROR I
THE TRIAL COURT ABUSED ITS DISCRETION AND HELD AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE BY FAILING TO EQUITABLY DISTRIBUTE THE MARITAL ASSETS AND DEBTS OF THE PARTIES.
(¶4} Husband argues that the trial court incorrectly made him responsible for all of the parties' federal tax debt. Revised Code Section 3105.171(C)(1) "requires trial courts to divide marital property equally, except to the extent that an equal division would be inequitable." Smith v. Smith , 9th Dist. Summit No. 26013, 2012-Ohio-1716, ¶ 8. "Although the allocation of debt is not specifically addressed in the statute, the division of property also includes marital debt." Id. Accordingly, "although equal division may be a starting point for the division of debt, a trial court may divide debt unequally if an equal division would be inequitable." Id. "A trial court's division of marital debt is reviewed for an abuse of discretion." Id. "An abuse of discretion implies that the court's decision is arbitrary, unreasonable, or unconscionable." Id
(¶5} Wife presented evidence that the parties owe $24, 891.68 in unpaid federal taxes, tax penalties, and interest for the years 2005 through 2007. According to her, the reason they owe that much is because Husband failed to submit any of his self-employment social security taxes for those years. In prior years, Husband had paid the self-employment tax quarterly throughout the year. Unbeknownst to her, he stopped making quarterly payments in 2005. In fact, he made no payments toward his self-employment taxes in 2005, 2006 and 2007. Wife also testified that, despite her urging, Husband waited three years to take his paperwork to their tax preparer so that they could file their personal tax returns. Accordingly, by the time they filed their returns, they owed $21, 973.74 in unpaid self-employment taxes and $2917.94 for penalties and interest. Based on her testimony, the trial court found that Husband was solely responsible for the fact that the parties had an unpaid tax balance. It also found that, because he was responsible for the parties not filing their tax returns on time, he should be solely liable for all of the penalties and interest that had accrued. It, therefore, made him responsible for the entire balance owed to the IRS.
(¶6} There is competent credible evidence in the record that Husband did not submit all of the taxes that he owed when they were due, that he did not timely provide the parties' tax preparer with all of the necessary information to file their returns and that, because of his actions, Wife did not know that they had an outstanding tax balance until it was too late to avoid penalties and interest. We, therefore, conclude that the trial court exercised proper discretion ...