USA: Analysis of the IRS Decision on Marriage Equality

Written by scott on August 30th, 2013

IRS_logoWe’ve got a couple follow-up stories this morning on the ramifications of the IRS decision to treat all legally married same-sex couples the same, regardless of where they live.

First off, from the Business Insider, a look at what the new rules will mean for the federal budget:

Over the long term, this decision will increase federal tax receipts by a little. But this year, the federal government may actually lose a little revenue. Some married couples face a “marriage penalty,” meaning they owe more taxes than if they were single, while others get a “marriage bonus.” But the penalty effect is more important. Back in 2004, the Congressional Budget Office estimated that gay marriage would mean about $700 million a year in added tax revenues. In practice, because of tax policy changes since 2004, the added revenues would likely be somewhat less. But one key component of today’s announcement is that the IRS will accept amended tax returns from gay couples going back as far as 2010. If you filed previous years’ taxes as single because the IRS didn’t recognize your marriage, you can go back and change old tax returns to say you’re married–but only if you want to.

And over at BuzzFeed, Chris Geidner is arguing that the IRS just made life difficult for states that don’t yet recognize marriage equality:

Jon Davidson, the legal director at Lambda Legal, said the decision is “going to make things more complicated for the states.” Before DOMA’s bar on federal recognition of same-sex couples’ marriages was struck down, married same-sex couples in states like Massachusetts had to file as unmarried at the federal level because “people were treated as married for state purposes but not federal ones,” he said. Now, he explained, the difficulties will be reversed — with same-sex couples being treated as married by the federal government but not by many state governments. The IRS’ decision is going to set up a series of questions around the country because more than half of the states ban same-sex couples’ marriages by their state’s constitution. At the same time, however, many states base their own tax filing system on federal filings. “I expect what will happen is that Ohio will say you have to file as single, and that they will do that based on the constitutional amendment,” Davidson said. Santa Clara University Law professor Patricia Cain agreed, telling BuzzFeed states like Ohio with such amendments will have to “change their state income tax reporting rules to unhook them from federal reporting.”

Again, this is just an amazing time to be alive. You can really feel the momentum building on our side – things are a changin’.

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2 Comments so far ↓

  1. Lucinda says:

    Wow! That is really something. So in essence the states will be legally recognizing same gender weddings via tax returns even if they don’t recognize them due to their anti-gay constitutional amendments. What a hoot!

  2. Michael says:

    It will be fascinating to see if this speeds up the demise of the evil state amendments banning same-sex marriage.

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