About that whole IRS scandal...

[ArtK78]

As if the IRS did not have its hands full with the scandal, and the automatic budget reduction, now they have to figure out what to do about homosexual unions with respect to 2012 and 2013, since they now are qualified as married under the regulations. They may be faced with amended claims looking for refunds as well as faced with potentially collecting the "marriage tax" and penalties and interest.

Not really.

 

Until DOMA was declared invalid, it was a valid federal law. Therefore, even if a same-sex couple was married under local law, the couple could not file a joint federal income tax return. Now they can. But the ruling is not retroactive.

 

The only one who gains retroactive relief is the plaintiff in Windsor v. U.S. She is allowed to gain the benefit from the marital deduction under the federal estate tax since she prevailed in her refund suit in the estate tax case.

[GreenMan]

The main burden may be on the tax filers. I've been hearing that same-sex couples who live in states that don't recognize their marriage will have to file federal returns as married and state returns as single, and since state forms generally just use the federal AGI as a starting point they'll have to calculate their federal taxes both ways.

 

But I don't know if it was the other way around for these couples who lived in states that *did* recognize their unions. Maybe the problem just moved from one set of states to another. Anyone have some insight here?

[awm]

The main burden may be on the tax filers. I've been hearing that same-sex couples who live in states that don't recognize their marriage will have to file federal returns as married and state returns as single, and since state forms generally just use the federal AGI as a starting point they'll have to calculate their federal taxes both ways.

 

But I don't know if it was the other way around for these couples who lived in states that *did* recognize their unions. Maybe the problem just moved from one set of states to another. Anyone have some insight here?

 

One of my wife's friends had this status in California (same-sex marriage in CA law from before prop 8 passed, but unmarried in federal law because of DOMA). She and her wife had to file as single for federal taxes and married for state taxes, which was very complicated. Fortunately she won't have this problem any more!

[PassedOut]

One of my wife's friends had this status in California (same-sex marriage in CA law from before prop 8 passed, but unmarried in federal law because of DOMA). She and her wife had to file as single for federal taxes and married for state taxes, which was very complicated. Fortunately she won't have this problem any more!

One of my nieces lives in Iowa and had the same situation, now resolved.

:)

[ArtK78]

You have to have a valid marriage under state law to file a joint return for federal income tax purposes.

 

If the state that you reside in does not recognize same-sex marriages, then a same-sex couple is not married for federal purposes.

 

However, and this is a question that is not resolved, if a same-sex couple is married in a state that recognizes same-sex marriages moves to a state that does not recognize same-sex marriages, the issue of whether that couple loses its status as married for federal purposes is not known at present.

[GreenMan]

You have to have a valid marriage under state law to file a joint return for federal income tax purposes.

 

If the state that you reside in does not recognize same-sex marriages, then a same-sex couple is not married for federal purposes.

 

However, and this is a question that is not resolved, if a same-sex couple is married in a state that recognizes same-sex marriages moves to a state that does not recognize same-sex marriages, the issue of whether that couple loses its status as married for federal purposes is not known at present.

 

According to the LAT, some federal agencies use the "place of celebration" -- where you got married -- and others use your current residence. Federal employees and their families get full benefits regardless of where they live. The president could resolve most of the confusion by ordering the agencies to go one way or the other, and he's expressed sympathy for the "celebration" camp.

[barmar]

However, and this is a question that is not resolved, if a same-sex couple is married in a state that recognizes same-sex marriages moves to a state that does not recognize same-sex marriages, the issue of whether that couple loses its status as married for federal purposes is not known at present.

There's been a recent thread on misc.taxes.moderated wondering about this situation. It seems to hinge on the "full faith and credit" clause of the Constitution:

Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof.

[barmar]

Until DOMA was declared invalid, it was a valid federal law. Therefore, even if a same-sex couple was married under local law, the couple could not file a joint federal income tax return. Now they can. But the ruling is not retroactive.

Hmm, last week someone being interviewed on NPR indicated that it was, and people could amend their returns from the past couple of years.

[blackshoe]

I'm not sure exactly what the ruling said, but it seems to me if a law is ruled unConstitutional, then it should never have applied in the first place, and the right to submit corrected tax returns should go back to whichever of the law or the same sex marriage (or whatever) came last.

[kenberg]

Yes, so it seems to me also. The Law is, perhaps, based on logic. But very peculiar logic. There was a piece in the Post today about gay divorce. The (hypothetical but probably there are or will be real examples) example that they gave is of a smae sex couple, married in New York, living in Pennsylvania, not getting along and deciding to divorce. Pennsylvania does not recognize their marriage, so they could not divorce there. New York has no residency requirements for marriage, but for divorce there is a one year residency requirement. Uh huh.Logical. And nuts.

 

I suppose that this will all get sorted out sometime.

[barmar]

I suppose that this will all get sorted out sometime.

Eventually I expect most states will jump on the gay marriage bandwagon, just as they did for interracial marriage. Or maybe there will be a gay equivalent to Loving in the future, that recognizes that prohibiting gay marriage also violates the 14th Amendment.

[ArtK78]

I'm not sure exactly what the ruling said, but it seems to me if a law is ruled unConstitutional, then it should never have applied in the first place, and the right to submit corrected tax returns should go back to whichever of the law or the same sex marriage (or whatever) came last.

 

That is not necessarily the case. Often, the Supreme Court will state in its ruling whether the ruling has retroactive effect or not. It did not do so in this case. Still, the commentaries that I have read doubt that the effect of the ruling will be retroactive.

 

Interestingly, there is at least one commentary that states that the ruling will increase federal income tax collections, not decrease them. Often both members of a same-sex couple are wage earners. As their marriage was not recognized for federal tax purposes, the two individuals could not file their income tax returns as married - they both had to file as single. If their earnings were approximately the same, it is likely that their combined income tax liability as married fling jointly would be higher than as two separate returns filing as single individuals (the so-called marriage penalty).

 

[Note that a married couple that files separate returns - married filing separately - is not the same as if they were both single filing as two single individuals. Filing as married filing separately almost always results in a higher combined income tax liability than married filing jointly.]

 

If the ruling has retroactive effect, should the IRS go back and force these married couples to amend their returns to file as married (jointly or separately is up to them)?

 

Another interesting point is that the ruling will have a much more significant effect in the pension and benefits areas than in the tax areas. Spouses have a number of rights to the other spouse's pensions under federal law. If the effect of the ruling were retroactive, there would have been a significant number of incorrect payouts from pension plans over the time since the enactment of DOMA. And the benefits area is replete with rights afforded to spouses that are not available to unrelated individuals.

[blackshoe]

The simplest way to sort it out is to recognize that marriage is a civil contract between individuals (possibly more than two individuals), and that in a country based on the principle of individual freedom, neither the government nor organized religion has any business sticking their oar into that contract.

 

I too expect it will get sorted out - but I'm not holding my breath 'til it happens.

[kenberg]

The simplest way to sort it out is to recognize that marriage is a civil contract between individuals (possibly more than two individuals), and that in a country based on the principle of individual freedom, neither the government nor organized religion has any business sticking their oar into that contract.

 

 

Perhaps so. I grew up in a different era. The guy understood that if he wanted a say in how the kids were raised, he should marry the girl. The woman understood that if she wanted some sort of economically feasible life, she should get married before having children.

 

That's long, long gone. Ancient history. So make it a contractual arrangement. Maybe the kids can sue someone.

[blackshoe]

"He should marry the girl." IOW, they should come to some agreement as to who is responsible for what, who gets what benefit, and so on. IOW, they should make a contractual arrangement.

 

It seems to me the phrase "marriage contract" has been used to describe the situation even when religion is not only involved, but pretty much de facto in charge.

 

All I'm saying is that the government has no business telling free citizens what kind of contracts they can write between themselves, or taxing or "licensing" such contracts. And organized religion has no business influencing the government to do that — which is what has happened in Western society over the past several hundred years.

 

If I were a member of some religion, and that religion's bosses told me "you can make this kind of marriage contract, but not that kind" I would either go along with that and remain a member of that religion, or I'd go find or found some other religion that will let me do what I want. Hm. That's pretty much what Henry the Eighth did, isn't it? B-)

[ArtK78]

If I were a member of some religion, and that religion's bosses told me "you can make this kind of marriage contract, but not that kind" I would either go along with that and remain a member of that religion, or I'd go find or found some other religion that will let me do what I want. Hm. That's pretty much what Henry the Eighth did, isn't it? B-)

It's good to be the King. Mel Brooks :)

[blackshoe]

ROFL! Too true! Though Louis XVI might disagree. B-)

[barmar]

The simplest way to sort it out is to recognize that marriage is a civil contract between individuals (possibly more than two individuals), and that in a country based on the principle of individual freedom, neither the government nor organized religion has any business sticking their oar into that contract.

So the government shouldn't have laws regarding whether insurance covers spouses, whether spouses should get special treatment in inheritance, whether employees should be allowed time off from work for family issues, whether spouses have financial interest in each other, power of attorney, etc.? Each couple should get to set all the terms of their partnership, with no mininal standard?

 

Sounds more like a business relationship than a marriage. Oh wait, we have laws governing those types of contracts.

 

And how are employers and other third parties supposed to deal with this? They were not party to this contract, do they each get to decide whether you're married for their purposes? Or do we get rid of family leave, family insurance plans, etc.?

 

It seems like a nice ideal when you first suggest it, but it's really untenable. Special treatment of families and spouses pervades society, and it's practically impossible to avoid government regulation of it.

[cherdano]

Do you also suggest to extinguish any mention of family relation in any aspect of US law? Do you expect the US to lobby every other country to do the same?

Otherwise, what do you expect other countries to do if they allow a US citizen with a work VISA to bring family members along?

 

Or have you possibly not fully thought through the consequences of your suggestion? Just maybe?

[blackshoe]

Do you also suggest to extinguish any mention of family relation in any aspect of US law? Do you expect the US to lobby every other country to do the same?

Otherwise, what do you expect other countries to do if they allow a US citizen with a work VISA to bring family members along?

 

Or have you possibly not fully thought through the consequences of your suggestion? Just maybe?

OUr politicians don't think through the consequences of their legislation. Why should I be required to think through all the consequences of a suggestion I threw out for discussion on an Internet forum?

[dwar0123]

OUr politicians don't think through the consequences of their legislation. Why should I be required to think through all the consequences of a suggestion I threw out for discussion on an Internet forum?

How to win internet arguments 101.

 

I'm wrong. But you are wrong for pointing it out!

[blackshoe]

ROFL!

 

I never claimed that my proposed change doesn't come with its own set of problems. I don't have all the answers, either. If that makes me "wrong", then so be it.

[kenberg]

Our politicians don't think through the consequences of their legislation. Why should I be required to think through all the consequences of a suggestion I threw out for discussion on an Internet forum?

 

This appeals to me.

[ArtK78]

Here is a small portion of an interesting discussion of the Supreme Court decisions striking down DOMA and California's Proposition 8, from Bloomberg BNA Weekly Report for the week of 7/8/13, a professional tax publication. This portion discusses the retroactive effects of the decisions:

 

After months of debate and weeks of waiting, the U.S. Supreme Court June 26 released its rulings in U.S. v. Windsor and Hollingsworth v. Perry, striking down a key provision in the Defense of Marriage Act and, in Hollingsworth, finding that the opponents of same-sex marriage lacked standing to appeal. On the day of the decisions, BNA interviewed Nicole Pearl, a partner at McDermott Will & Emery who has extensive experience in tax planning for gay, lesbian, and unmarried couples, asking her about the impact of these decisions on the calculation of tax, amended returns, and state tax policies.

 

BNA:

 

How does the court's finding DOMA unconstitutional affect the tax returns that same-sex couples have filed in the past? Would there be an opportunity for amended returns and refunds, and what sort of issues might these amended returns cause?

 

PEARL:

 

This allows same-sex couples who have created a legal marriage in any state to go back and amend any income, estate, or gift tax returns in which the statute is still open (generally three years from the date of filing). This would allow couples to go back as far as their 2009 returns (assuming that they were filed on extension in 2010). Of course, there is no duty to amend tax returns so couples can decide based on their particular circumstances whether this would make sense for them.

 

This also gives rise to further questions. For instance, are couples that registered as domestic partners or formed civil unions in their states of domicile because they were not allowed to marry in those states allowed to go back and amend their returns? Could they be considered to be married under federal law, or would they have to take some further step in order to legitimize their marriage (for example, obtain a marriage license).

[cherdano]

OUr politicians don't think through the consequences of their legislation. Why should I be required to think through all the consequences of a suggestion I threw out for discussion on an Internet forum?

This appeals to me.

(Directed at blackshoe:)

Or have you possibly not fully thought through the consequences of your suggestion? Just maybe?

ROFL!

 

I never claimed that my proposed change doesn't come with its own set of problems. I don't have all the answers, either. If that makes me "wrong", then so be it.

This would have more appeal if there wasn't a pattern:

 

BBF: discussed issue X

Blackshoe: THE SOLUTION IS SO SIMPLE JUST GET THE GOVERNMENT OUT OF IT.

BBF: But have you thought about the consequences? Can you name an example where this worked?

Blackshoe: ???

 

His libertarian non-sense would be more believable if there was a single case where blackshoe had thought through the consequences of his ideological reflex. And it's not just a problem with blackshoe, it's a problem with the whole movement. A movement that adores a leader who is in favour of the most idiotic economic decision the US government could possible make (return to the gold standard).

 

At some point, your ideology should be able to survive enemy contact with reality.