For Same-Sex Couples, Tax Filing is Particularly Complicated

Six states have now legalized same-sex marriage, but the federal Defense of Marriage Act still governs federal law when it comes to gay and lesbian couples.

Given the current political make up of Congress, it would be an understatement to say that federal lawmakers are unlikely to repeal or amend that legislation anytime soon. So across the country, gay rights activists are pursuing legal appeals. Here in California, some have also pushed for change using the tax code.

Santa Clara University Law Professor Patricia Cain was one of the principal forces behind the Franchise Tax Board’s 2007 decision to allow registered domestic couples to file jointly. But it hasn’t been an easy change logistically. Cain and her wife have to deliver one tax profile for the state, and another for the Internal Revenue Service.

"You have to file as married at the state level and single at the federal level," she explains. "So you have to file two single returns at the federal level. Then you have to fill out a mock joint return at the federal level in order to determine what your state liability is."

Got that? But Cain isn't intimidated by the complexity of the tax code, state or federal. She's energized by the issue, in fact, blogging about it with gusto.

Here's Cain talking at length about tax law as it applies to same-sex couples. "I think tax law may lead us to true equality one day," Cain says. "I think the IRS would be very happy if we could all just be treated as married."

Patricia Cain on the tax code for gay and lesbian married couples

As Scott James has reported in the Bay Citizen, the IRS recently apologized to same-sex couples who received computer generated queries.

The agency's statement:

Due to an IRS error, some taxpayers were incorrectly sent letters seeking more information before their tax returns could be processed. These returns were filed primarily by registered domestic partners filing community property returns from Nevada, Washington and California.  The tax returns were marked in ways that were not identified accurately during IRS processing.

As soon as the IRS learned of the mistake, the agency took steps to correct the process to avoid this problem going forward.

At this point, we don't know precisely how many registered domestic partners wrongly received this letter, but we believe it only involves a few hundred taxpayers.

We are working to identify any returns incorrectly processed before the system was fixed. Meanwhile, anyone who suspects their return was part of this mistake should contact the IRS using the phone number included on the letter and explain that they believe the letter was sent in error.

The IRS apologizes for this mistake and sincerely regrets any inconvenience to taxpayers.

The IRS emphasizes that these letters were system-generated notices and were signed automatically with a manager's name. The individual had nothing directly to do with this systemic letter. Our managers routinely have their names signed on hundreds of thousands of letters annually covering a wide variety of tax issues.