National Taxpayer Advocate Nina E. Olson has released her 2013 Annual Report to Congress and it includes a section recommending additional guidance to same-sex couples, married and unmarried. A copy of the relevant section of the report can be found at http://www.taxpayeradvocate.irs.gov/userfiles/file/2013FullReport/DEFENSE-OF-MARRIAGE-ACT-IRS%2C-Domestic-Partners%2C-and-Same-Sex-Couples-Need-Additional-Guidance.pdf
The rulings and notices issued by the IRS post-Windsor have clarified many issues for same-sex couples, but there are a number of unanswered questions. Of particular concern, in my view, is the fact that the IRS concluded that Registered Domestic Partners (RPDs) and Civil Union Partners (CUPs) will not be treated as spouses under federal tax law. This makes no sense. Under state law such couples receive all of the major rights and responsibilities of spouses. They are similarly situated for equal protection analysis. Recently, three judges on the Ninth Circuit Court of Appeals released an opinion finding that it was a violation of equality under the Fifth Amendment to deny spousal benefits to RDPs. While the opinion was written in the court’s capacity as a federal employer and not as an opinion in a case, its reasoning supports treatment of RDPs as spouses for federal tax purposes in general. The opinion is In re Fonberg, 736 F.3d 901 (9th Cir. Jud. C. November 25, 2013) and is available at http://cdn.ca9.uscourts.gov/datastore/opinions/2013/11/25/13-002%20web.pdf
If the IRS continues to deny spousal status to RDPs and CUPs, then it should at least issue some guidance about how such couples will be taxed when they engage in spousal transactions like “divorce” or “dissolution.” The National Taxpayer Advocate asks for guidance on this matter.