Scott James, writing for the New York Times, January 14, 2011, headlines his piece “For Same-Sex Couples, a Tax Victory That Doesn’t Feel Like One.” He’s talking, of course, about the requirement that California, Washington, and Nevada RDPs must split their community income and deductions.
I’ve written on this topic before in this blog. It is a topic that continues to demand attention. Yes, it is a victory to know with some certainty that the federal tax rules regarding community property will apply to same-sex couples who are subject to community property regimes. But there is a huge downside, as well. For opposite-sex married couples who are subject to community property regimes, the rules are pretty clear. Many of those rules will apply to same-sex couples who are similarly situated, but some will not. That is because there are some statutory and regulatory rules for married couples with community property and those rules are not available to any same-sex couples so long as DOMA is the law. All of the IRS publications and forms dealing with community property are geared to married couples who may be filing separately, a status known as married filing separately. But RDPs will need to apply the community property rules to themselves as taxpayers who are required to file as single (or, if they qualify, as Head of Household).
The more we look at these complications in the details of how to apply the rules, the more obvious it is that it would be much easier for everyone, especially the IRS, if same-sex spouses and RDPs were entitled to the same rules as similarly-situated opposite-sex spouses. Some have argued that these tax complications are likely to play a pivotal role in leading us closer to true equality for same-sex couples.
I made that point myself a couple of nights ago at a community seminar on the new tax law. I was joined by three expert tax-return preparers, Karen Stogdill, Deb Kinney, and Chris Kollaja, who discussed a number of the complications. If you’re interested, you might take a look at the webcast here.