Nadine Smith

Tips for Gay Couples Considering Filing As Married

Filed By Nadine Smith | April 13, 2010 10:30 AM | comments

Filed in: Living, Marriage Equality
Tags: gay couples, tax, tax time

If you are a gay couple, legally married in a state or country that performs such marriages, can you file your federal income tax return as married even if the federal government refuses to acknowledge your marriage?

buy-a-house-save-on-taxes.jpgGeneral Answer: Because the Defense of Marriage Act (DOMA) defines marriage for federal tax purposes as excluding same-sex couples, only opposite-sex couples can file as married.

Note: GLAD has filed suit in federal district court in Massachusetts, claiming that DOMA is unconstitutional. Their lawsuit includes a number of plaintiffs who want to file their tax returns as married rather than single.

Tax advisers have warned same-sex married couples not to file as married (either jointly or separately) because of the possible imposition of penalties for doing so. Yet the federal return requires you to swear under penalties of perjury that all statements in the return are true. If you object to signing this statement on a return in which you have been forced by the federal government to lie about your marital status, there are some things you can do.

One option is to put an asterisk by the single box and at the bottom of the form indicate that you are only single under DOMA. Another option is to include an attachment to your return, similar to the following:

Sample Attachment to Federal Tax Return Affirming Marriage

Name of taxpayer:
Social Security #:

The above named taxpayer married a person of his/her same sex in [place] in [year]. The taxpayer has not filed this return as "married" (either jointly or separately) solely because the Defense of Marriage Act (DOMA) defines marriage as a legal union between a man and a woman. By filing as "single," the taxpayer is in no way disavowing his/her marriage.

Some tax advisers have suggested that you might be able to file a joint return if you not only had a sincere belief that DOMA was unconstitutional, but also had a reasonable legal opinion to that effect. Section 6664(c) of the Internal Revenue Code provides that "no penalty shall be imposed [for the underpayment of tax] if ... there was a reasonable cause for [the underpayment] and the taxpayer acted in good faith...."

Most legal practioners, however, are unwilling to provide their clients with a legal opinion that DOMA is unconstitutional because such an opinion is likely to subject them to preparer penalties under Section 6694. To avoid penalties, the opinion would have to be based on "substantial authority" and at the present time all courts that have considered the constitutionality of DOMA have upheld it. That could change in the future with the test case that is being pursued by GLAD.

Some commentators have suggested that in addition to meeting the reasonable and good faith requirements of Section 6664(c), you must also file Form 8275-R or Form 8275, disclosing your position, with your Form 1040. However, these forms are intended to be used when a taxpayer is taking a position contrary to a revenue ruling or a Treasury regulation, and not when the taxpayer is ignoring a statute, such as DOMA. It is unclear how a taxpayer objecting to a statute would fill out these forms, but if your intent is to disclose your position, the preferred means of disclosure is to use official IRS forms.

Penalties have been applied to other taxpayers who made constitutional claims about marital status. Some years ago a married couple, who honestly believed that the marriage tax penalty that resulted from combining their two earned incomes on a joint return was unconstitutional, elected to file their returns on the basis of single taxpayer rates. They claimed the marriage tax penalty was an unconstitutional burden on their marriage. The Court of Appeals for the Second Circuit decided otherwise and also upheld the imposition of a penalty on the couple.

The lesson from this case is that you probably cannot avoid paying penalties, even if you disclose, when the law that you are ignoring is a statute, rather than a mere rule or regulation. See Druker v. Commissioner, 697 F.2d 46 (2d Cir. 1982).

The penalty for an underpayment for disregard of a rule is calculated based on a percentage of the underpayment. The amount of the penalty is an additional 20% of the underpaid tax. It isn't clear who this penalty would be assessed against in the case of two taxpayers who filed jointly rather than as two single people.

For example, if A, filing as single, would have owed $3,000 in tax and B, filing as single would have owed $31,000, but filing jointly, together they owe only $33,000, then the underpayment that results from disregard of the statute is $1,000. Presumably the $1,000 penalty would be levied only against B, the higher of the two earners.

How can you affirm your marital status, object to DOMA, file a joint return, and not be subject to penalties? Here are two possibilities:

1. File two single returns (including the attachment affirming the marriage) and then file an amended return, filing jointly. The amended return is a 1040X. This is what the plaintiffs in the GLAD case did. Once the IRS rejects the amended return, or if six months passes and they do nothing, the taxpayers who file an amended return have the right to file suit in federal district court claiming the refund.

The basis of the claim for refund by a Florida same-sex couple would be that they were married, that under the U.S. Constitution that marriage should be recognized, that it would be perjury to claim otherwise, and that DOMA itself is unconstitutional. This option would avoid penalties because your original return would be filed according to the statute.

2. Submit two returns to the IRS, one filed jointly, showing the tax due on a joint return, and one filed as a single taxpayer, showing the tax due on a single return. Explain your constitutional and moral theory entitling you to file a joint return. Pay whatever amount is due on the single return and ask the IRS to choose which return to accept.

If you have paid the amount due on the basis of a single return, then you have not made an underpayment as a result of disregarding a statute. Penalties are only due if there is an underpayment. If the IRS accepts your single return and accepts your tax payment on that basis, there is no penalty. Of course if the IRS accepts your joint return and that results in a refund to you, there is no way to know what will happen if you are later audited. That would be a new case.

In many cases, of course, you will actually pay a higher tax if you file jointly. In that case, you should not owe a penalty.

This information is not intended to be relied upon as legal advice, which is the application of the law to an individual's specific circumstances. Please consult an attorney for legal advice specific to your particular situation.

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What about same-sex legally married couples that started out as a heterosexual married couple?

When my wife and I married in 1995, I was male. Now that I've transitioned to female what will the IRS's take be on us filing jointly?

I just updated my SS records and birth records this year to reflect my corrected gender so I guess this will potentially affect me next tax season.

Paige, the general rule is that a marriage that was legal when and where it was entered into remains valid until one partner dies, the marriage is annulled, or the partners divorce. Thus, I believe that your marriage remains valid and should not be affected by DOMA, or any state equivalent. Every other attorney whose writings I have consulted on this issue agree with me. Whether the IRS, or your state tax entity, will agree is unknown, however, since this issue has yet to be litigated.

I have a friend who is an employee of the IRS and who also entered into a valid, opposite-sex marriage prior to transition, SRS, change of birth certificate, etc. She has informed me that the IRS recently circulated a memo directing all tax return examiners to pull any joint returns apparently involving a same-sex couple for audit. Thus, this issue may start coming up soon. She is considering asking for an official ruling from the IRS on the continuing validity of her marriage for federal tax purposes, but has not yet done so. Without such a ruling from the IRS or the courts, we're all shooting in the dark on this one.

One bright spot, however, is that the Office of Personnel Management (the federal office that handles insurance and other benefits for federal employees) has recognized my friend's marriage as valid for purposes of obtaining medical insurance coverage for her wife and daughter.

You may want to consult a CPA or other tax professional on whether taking steps like those Nadine has suggested would minimize your liability if the IRS refuses to recognize your marital status.

I think it's interesting how many contributors have done posts about gay couples filing taxes this year. You can tell we've hit a tipping point now.

Nadine Smith Nadine Smith | April 13, 2010 6:42 PM

These are the places where the gap between the professed values of our country and the harmful actions it allows can be made clear to our families, friends and neighbors.

It is a tipping point indeed.

Are there any clues what the IRS response would be to a same-sex married couple filing jointly and paying more taxes than they would have by filing as unmarried?

Would penalties still be incurred, offset by the refund of the overpayment?

Could make for an interesting point: "We're gay, married, responsible citizens, ready to fulfill our obligations, and the IRS doesn't want our money."

Nadine Smith Nadine Smith | April 14, 2010 2:05 PM

Bose I think that is the message we have to begin to deliver. If married gay couples took the principled stand that we will never lie - deny our spouses - no matter how many ways the government tries to compel us to do so, we would inspire many neghbors,family and friends on the sidelines to realize they have to take a stand as well.

Hey Nadine... maybe that's where we need to take things next year... getting ten thousand married couples signed up to file jointly and pay the same or more than they would have otherwise.

Nadine Smith Nadine Smith | April 16, 2010 9:29 AM

I think that kind of response is in the true spirit of non-cooperation with an immoral law.

Nadine Smith Nadine Smith | March 10, 2011 3:56 PM

If you are a legally married gay couple and plan to or already have filed your taxes as married, please contact me at [email protected]

I'm seeing how helpful this memo has been to people who decide to file as married.