Factual error: Peg says she did the taxes and claimed 23 children. First of all, you can't. Max number of dependents is 2-3, and second you have to have birthdates and social security numbers for everyone. You can't just write whatever you want and send it to the IRS. And it's a joint return yet Peg says she didn't sign her name. You have to. So in reality, she would get in trouble too since she actually lied on the tax return.
Continuity mistake: A lady agrees to buy some of Peg's red hair. It shows the lady with two baggies with red hair in them, but at the end of the episode we see that they used Buck's hair, which is far from being red in color, or anything like human hair.
Answer: It's implied that Steve filed for divorce since in s04e16, "You Gotta Know When to Hold 'Em", Marcy says that Steve is suing for alimony. Alimony is something that has to be requested when filing for divorce. Although the show doesn't spend time on the actual legal proceedings of their divorce.
Bishop73