What would I like for my birthday? How about an apology from the IRS about how it has been treating same-sex couples in community property states this tax season? Voila! It came — just one day after my real birthday. Close enough.
I don’t like to work on my birthday. That was yesterday. But now I’m back on email and late today I got a message from Scott James who writes for the Bay Citizen and the New York Times. We talked some time ago about some of the problems that same-sex couples have faced this tax season. Many of those problems were caused by the new IRS position that same-sex couples in community property regimes were required to split their income on their tax returns. Many couples have been diligently trying to follow the new rules — often paying higher return preparation fees as a result.
Trust me, the law is complicated. But the IRS got it right at last. Yes, income of couples in community property states should be split because it is owned 50/50. Only the IRS did not do a good job of letting all its employees know of the change in position. As a result, many same sex couples received form letters questioning the 50/50 split.
As Scott James reports, the IRS has again done the right thing. It has apologized publicly for the hassles it has caused these couples. See his story here. And see his follow-up story on the details of this battle here.
Just to be clear, in my view, the battle is not between us and the IRS. The IRS wants to do the right thing. It wants to tax each citizen on the right amount of income under existing law. That is its job. However, the IRS is seriously hampered from promulgating rules that apply to same-sex couples by the the Defense of Marriage Act (DOMA). The IRS is to be commended for understanding that DOMA cannot usurp state property law. Thus I continue to applaud its decision about how to tax community income of same-sex couples. And now that the IRS understands how difficult it is to communicate these new rules, even to its own employees, I applaud them again — this time for their apology — which, by the way, I accept.
