Since opposite-sex RDPs are not affected by DOMA, is it possible for them to be considered married at the federal tax level? In other words, should they be filing as married (either jointly or separately)?
Good question. And I addressed it here in an earlier blog post. Although my focus there was on how same-sex RDPs would be treated in a world without DOMA. That was a hypothetical question. The question for opposite sex RDPs (as well as partners in a civil union) is a real one. And it is being raised frequently during this tax filing season by taxpayers in Illinois, Hawaii, Nevada, California, and Washington – all states that recognize opposite-sex marriage equivalents.
In my earlier post, I took the position that civil unions and RDPs are not married. Simply stated, having the same responsibilities and benefits extended to you by the state that are extended to married couples does not make you married. There are many reasons folks reject marriage and elect an alternative form of union. They do not consider themselves married. And if they move to a state that does not recognize civil unions or RDPs, they risk having their relationship ignored by the new state.
By contrast, if you are common law married in State X and you move to State Y, a state that does not otherwise recognize common law marriage, you are usually guaranteed recognition of your marriage. That is because the State Ys of the world have agreed to recognize valid marriages from other states – so long as they are not against public policy. Recognizing a common law marriage from another state is not against public policy in any state that I am aware of.
I believe the IRS has erroneously concluded that opposite-sex civil union partners are married for federal tax purposes because they have been granted spousal rights and responsibilities at the state level. I believe the IRS is relying on its earlier ruling that if you are common law married in a state that recognizes common law marriage, then you are married for federal tax purposes. But the situations are not really similar. If you are common law married you ARE married. If you are merely given the rights and responsibilities of married persons, you are NOT married.
Interestingly, the Illinois Department of Revenue, relying on the informal advice I referenced in my earlier post, has posted the following instruction for Illinois taxpayers:
Note: If you and your partner are treated as spouses for federal income tax purposes (such as an opposite-sex civil union), you should follow the instructions for married couples, without considering any of these special instructions for civil unions.
If you want to access the Illinois tax instructions regarding civil unions in full go here.
I think this is wrong although I agree that the IRS has informally concluded that this is the rule. But I think it is wrong because the IRS conclusion in the letter regarding Illinois civil unions concludes that if Illinois law treats the parties to a civil union as husband and wife, they are married. I am not totally conversant with what the Illinois civil union legislation does, but I do know the California RDP law. It does not treat the opposite sex parties to an RDP as husband and wife. It treats them as RDPs who are entitled to the same rights and responsibilities as spouses. That, in my mind is different, from common law marriage.
On the other hand, I do believe that partners who are treated the same as spouses ought to be treated as spouses under federal tax law. And I do believe the IRS has the power to construe the word “spouse” in tax statutes to include persons who have the same rights and responsibilities of spouses. I just don’t think they can announce such a major rule in a private letter that has no authority.
