Annual Exchange of Financial Information in Wisconsin
Over the last few days, I have fielded a number of questions dealing with the law in Wisconsin that requires an annual exchange of financial information when divorced with children. Many don’t even know the law exists, or there is a such a requirement. Others ask me, what is the due date for the exchange? What exactly has to be exchanged? Those are all legitimate questions and unfortunately, not necessarily answered in the statute itself. Let’s take a look at the statute to get started here;
sec. 767.54 Required exchange of financial information. “In an action in which the court has ordered a party to pay child support or family support under this chapter, including an action to revise a judgment or order under s. 767.59, the court shall require the parties annually to exchange financial information. Information disclosed under this section is subject to s. 767.127(3). A party who fails to furnish information required by the court under this section may be proceeded against for contempt of court under ch. 785. If the court finds that a party has failed to furnish information required under this section, the court may award to the party bringing the action costs and, notwithstanding s. 814.04 (1) reasonable attorney fees.”
So, What Does This Statute Mean Exactly?
Let’s dissect the statute together to see what is required and what it all means;
- 1. The statute applies to an underlying family court action or post judgment matter, but only where there is a child support or family support order involved.
- 2. The statute makes it mandatory to do the annual exchange; the word “shall” is used.
- 3. While the statute doesn’t specifically list what information is to be provided and exchanged, it refers to the d. 767.127 (3) which deals with confidentiality of the documents (see below for the *pertinent statutory provision).
- 4. The statute makes it mandatory for BOTH PARTIES to do the exchange, not just the payer.
- 5. The statute makes it clear that failure to provide the information can result in a finding of contempt of court, including an award of costs and fees.
- 6. The statute does not list the due date for making the exchange.
- 7. The statute doesn’t indicate whether the failure to provide for contempt has to be intentional. It is arguable that even a negligent failure to provide or not realizing you needed to comply with the law, could arguably result in a contempt finding.
*Pertinent Statutory Provision
sec. 767.127 (3) CONFIDENTIALITY OF DISCLOSED INFORMATION (a) “Except as provided in par. (b), information disclosed under this section and under s. 767.54 is confidential and may not be made available to any person for any purpose other than adjudication, appeal, modification, or enforcement of judgment of an action affecting the family of the disclosing parties.”
How Will I Know What Information is Needed?
Many times in divorce settlement agreements, parties will spell out exactly what financial information needs to be exchanged. The starting point are W2s and 1099s for the preceding year. This will verify the parties’ income from the last tax year. It can go one step further and the parties can agree to furnish a complete copy of their federal and state tax returns. Parties can also stipulate to providing updated check stubs at the time of the exchange from all places of employment and an updated financial disclosure statement under oath. That seems to be a lot for both parties to go through on an annual basis, so the basics of W2 forms and 1099s should really do the trick, for most cases. Since the statute does not specifically state what is to be provided, it is incumbent upon the parties to agree or for the court to order at trial, what is to be provided.
When Does the Exchange of this Information Happen?
Similar to what documents need to be provided is the issue of when the exchange should take place. The statute doesn’t mention a due date, only that there must be an annual exchange. A logical exchange date is April 15, since taxes are due that day. Routinely, we will use the 4/15 date as the date to make the exchange.
I tell people who ask me about the statute and what is required to put the request for the information in writing and save a copy of the letter. It may be that the other party voluntarily produces the documents each year, but more likely than not, you aren’t going to get, unless you ask first and persist on receiving the necessary documents. I would send a written request and a time demand when the documents need to be produced, let’s say 30 days. If they are not produced within 30 days, it is probably safe to pursue a contempt motion after that, and you can attach as an exhibit your written demand request that was ignored. For a particularly difficult or evasive former spouse, it may be that you want to send the letter by regular and certified mail, (where they have to sign for it), so they don’t pull in court, that they were never notified by you.
What Happens If the Statement is Not Filed On Time?
Courts are still grappling with how to enforce this statute where there has been a lack of compliance. Some courts take the position that they can go back to the point of time where the information was to have been provided and wasn’t, to enter a retroactive adjustment in child support to reflect the changes in the person’s income. The logic is, had the information been provided timely, the other person would have known of the increase or change income sufficient to modify support, and filed a motion for the adjustment at the time the information was furnished. Where the information was either negligently or intentionally not furnished, the court may go back to the time it should have been furnished and may do a retroactive support order. That is inconsistent by the way, with the law that indicates the court only has authority to enter a retroactive child support order to the point a motion was brought to modify support and the other person was notified of the request. I have also heard of instances where the courts have imposed a hefty financial fine including an assessment of actual attorney’s fees and court costs incurred in bringing a motion to court and staying away from making the retroactive adjustment in support, but making it up, if you will as a harsh penalty for paying fees and costs.
The statute, when analyzed, raises more questions than answers. However, what is clear, is there is a distinct law in the state of Wisconsin that requires both parties anytime there is an underlying family court case, or post judgment matter, and where minor children are involved receiving child support or family support, to do an annual exchange of relevant financial information. Further, the failure to abide by the law could result in a contempt charge against either party who fails to comply with the law’s requirement.
Learn more about the importance of a financial disclosure statement during divorce. For more information, reach out to us for a free consultation. We would be happy to answer any questions you may have.