Business owners, particularly sole proprietors, should take note of a recent landmark ruling by the Wisconsin Supreme Court that gives courts new tools to punish people who lie about their income or fail to disclose their income as required by law in order to avoid child support.
The state’s high court ruled on a case that originated in the early 1990s and involved a divorce filing between a Waukesha man and his wife. In the case, a Circuit Court ruling assessed a $100,000 contempt sanction on the self-employed man who tried to hide more than $1 million of income over a 10-year period, lying to two judges in the process.
The Court of Appeals reversed the Circuit Court’s ruling, which led to an appeal to the Wisconsin Supreme Court, where the man argued that disclosure of his true income came only after his ex-wife spent $30,000 in attorney fees over a prolonged period. As a result, he argued the late disclosure meant he could not be punished or forced to pay child support on his true income.
The high court disagreed and affirmed the $100,000 contempt sanction payable to the ex-wife to compensate her for some of her lost child support plus payment of his ex-wife’s attorney fees.
This is an important ruling in that it puts more teeth in statutes used by officials who enforce child support orders against those who hide their income.
Many states are finding creative ways to force deadbeat parents into paying child support whether it’s denying or suspending professional, occupational and driver’s licenses or seizing bank accounts and property. The federal government is also targeting the issue by denying issuance of passports to those who owe child support payments.
The recent ruling by the Wisconsin Supreme Court is a legal milestone in our state’s family law arena and should put sole proprietors who find themselves negotiating divorce settlements on alert. They should be aware that such precedent has been established in Wisconsin, and that purposely being deceitful about personal income can carry a stiff penalty.
