Friday, October 28, 2011

IRS nods towards surprising interpretation of civil union/domestic partnership...you may be "married" for tax law purposes

Pat Cain, tax law expert extraordinaire, shared an astonishing piece of news on her blog yesterday.  The IRS Office of Chief Counsel has written a  letter indicating that a different-sex couple in an Illinois civil union is considered married for purposes of filing a tax return at the federal level.  The letter says nothing about same-sex couples, presumably because DOMA blocks treating a same-sex couple as married under federal law.  (I've wondered sometimes if the federal government could recognize a civil union or domestic partnership because it isn't a marriage, which is what DOMA addresses.  But I'll leave that aside for now...)

Here is what's astonishing about this.  One of the reasons different-sex couples enter such a status instead of getting married is to avoid the federal consequences of marriage.  For example, a divorced woman collecting social security retirement benefits on the basis of her former marriage loses those benefits if she remarries.  Presumably this is the reason that some of the states that allow different sex couples into DPs limit it to couples where one person is at least 62 (the minimum age for a nondisabled person to collect social security retirement benefits).  But some states (Illinois, Hawaii, Nevada) as well as DC allow all different sex couples into the status.  And DC allows two people who live together "in a committed, familial relationship" to register as DPs.

As Pat Cain notes, this one letter is not "the law."  And it only applies to filing status.  If it does become the policy of the IRS it is hard to see how it could apply to filing status and not to other tax code provisions, and then it is hard to see how the IRS could consider a couple married without the Social Security Administration doing the same, which is where retirement and death benefits come in.

If this does become "the law" it has a special significance for me.  I'm in a DC registered domestic partnership and, as anyone who reads this blog or hears me speak knows, I do not want to get married.  But I would benefit from filing my federal tax return as "married." So...if DOMA is repealed, a ruling consistent with this recent IRS letter would mean I could stay in my DP and still file my federal taxes as married.  Cool!  It would also allow others to choose "civil union" or "domestic partnership" as an alternative to marriage without federal penalty.  That might make it too good to be true...So I'm not holding my breath!


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