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SAME-SEX MARRIAGE? NOT ON FORM 1040!

November 18, 2003

Now that the Massachussets Supreme Court has apparently opened the door to single-sex marriages, one urgent question immediately occurs to the tax practitioner: can a married same-sex couple file a joint federal tax return?

Up until 1996, the answer might have been "yes." A 1958 revenue ruling held: "The marital status of individuals as determined under state law is recognized in the administration of the Federal income tax laws."

Things changed in 1996 when President Clinton signed P.L. 104-199, the "Defense of Marriage Act." Section 3 of that act seems to limit the tax planning opportunities available to single-sex married couples:

“In determining the meaning of any Act of Congress, or of any ruling, regulation or interpretation of the various administrative bureaus or agencies of the United States, the word “marriage” means only a legal union between one man and one woman as husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.”

Until the courts get to work on the definitions of "man," "woman," or "opposite," a joint single-sex return seems out of the question. As a practical matter, this actually will work out well for such couples, most of which are likely to have two wage-earners - they won't face the tax law "marriage penalty."

WHAT ABOUT IOWA?

A March 14, 1973 technical memorandum seems to leave the door open to same-sex joint returns when it says "Iowa also recognizes as valid a marriage entered into in another state, if it is valid in that state." But Iowa also adopts the Internal Revenue Code, which is interpreted in light of the Defense of Marriage Act; therefore, Iowa probably follows the federal rules here.

This is also unlikely to affect many same-sex couples. Few "joint" Iowa returns are filed because the benefits of being married on Iowa returns are usually minimal. Same-sex couples won't flock to Iowa, at least not for tax reasons.

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