To Form a More Perfect Union: Marriage Equality News

Art Leonard: Oregon Tax Magistrate Rules Straights Not Entitled to Gay Benefit

Link: Leonard Link
by Arthur S. Leonard

Full text by permission. Source retains copyright.

Excerpt:

An Oregon tax magistrate ruled on September 24 that unmarried different sex couples are not entitled to a benefit that the Oregon legislature has provided to same-sex couples.  Rejecting an appeal from the Department of Revenue, Magistrate Dan Robinson found that the legislature did not violate the state constitution when it authorized state employees with same-sex partners to omit the value of domestic partnership benefits provided to their partners from their state income tax, but refused to provide the same benefit to unmarried different sex partners of employees.  Haldeman v. Department of Revenue, 2008 Westlaw 4371517 (Or. Tax Magistrate Div.).

The statute was a response to a decision by the Oregon Court of Appeals, Tanner v. Oregon Health Services University (1998), which had ruled that the equality provisions of the Oregon constitution required the state to provide spousal benefit rights for same-sex domestic partners of its employees.  The legislature reacted to the court decision, which was denied review by the state’s supreme court, by enacting provisions to extend such rights.

Federal tax law requires that the value of benefits offered to domestic partners of employees be reported as income of the employee, subject to tax.  The Oregon statute is intended to provide as much equality as possible under state law by exempting the value of the benefits from state tax, but only for same-sex partners.

Yvonne Haldeman’s unmarried male partner receives such benefits, and she tried to subtract their value on her Oregon state income tax form for 2006, but the Department of Revenue disallowed the subtraction, and asserted a tax claim against the value of the benefits.  Haldeman argued on appeal that by not extending to her the same economic benefit that is given to employees with same-sex partners, the state was again violating the equality requirement.

Robinson first had to determine the level of judicial scrutiny.  Turning to the Tanner case, he found that the court had applied heightened scrutiny to the state’s failure to provide domestic partner benefits to same sex couples, as the court had determined that gay people have suffered a history of discrimination, raising an inference of discriminatory motive when they are denied treatment equal to non-gay people.  But he found that unmarried heterosexuals have not generally been subjected to the same kind of discrimination, so they are not a suspect class entitled to heightened scrutiny of policies that disadvantage them.

Consequently, Robinson concluded that the state policy would survive constitutional challenge if that state had a rational basis for excluding different sex couples from this benefit.  He found that the state’s interest in promoting marriage – an interest not present in the case of same-sex couples, since Oregon law does not allow same-sex marriage – was directly applicable to unmarried different sex cohabitants, and would justify depriving them of the benefit, since they could easily qualify for non-taxable spousal benefits by marrying.

[jw]

Even in MA, CA, Marriage Equality Not Equal at Tax Time

Link: EDGE Boston

Excerpt:

Even when states such as Massachusetts and California offer their residents marriage equality, when it comes to federal taxes gay families are still separate--and unequal.

An article posted at BankRate.com explains that under the provisions of the 1996 federal Defense of Marriage Act (DOMA), the federal government and all of its offices, including the IRS, are obligated to treat only mixed-gender couples as married, even if same-sex families might have been married at the state level.

That is generally not a problem for most people, until it comes to tax issues. Not only are the annual federal income taxes impossible for gay marrieds to file jointly; other tax issues, such as capital gains taxes for the sale of a home, are also affected by DOMA.

Explained attorney Jo Ann Cintron, who works out of Boston, MA, and has worked with same-sex couples going through divorce, "If two people get married, the federal government is not interested in that until they try to take advantage of a preferential tax treatment that is granted on the basis of marital status."

Added Cintron, "Once they attempt to avail themselves of that, the federal government takes notice."

For mixed-gender marrieds, that can mean a tax break on the sale of a principle residence of $500,000, whereas gay marrieds can only take the tax break available to single people, an amount of only half that much. Though it is the case that if both own the property jointly each of them can take the $250,000 break under certain circumstances, that would not be true in other situations, such as when one partner is a stay-at-home spouse.

Capital gains taxes are also more complicated for gay marrieds who get a divorce, because under federal law, their marriage was never recognized in the first place. Any property awarded to one ex-spouse from the holdings of the other can mean a federal tax bill is on the way.

Even at a state level divorce can be a messier business for gay families if they were married in one state but then lived in a state that does not offer marriage equality when they decided to divorce; because state laws then would not be set up to accommodate divorcing same-sex couples, a lawsuit might be necessary for one spouse to claim property or other support from the other, the article said.

According to tax analyst John Roth, "The only way that they could possibly divide the property, if, say, they bought a piece of real estate jointly, would be for one partner to go into court and ask for a partition suit to break the ownership and force the other partner to buy them out."

Added Roth, "But if that were the case, capital gains tax would incur" since DOMA does not allow the IRS to view gay divorce as the end of a marriage between individuals of the same gender.

[hj]

"Frank to review FDIC policies regarding gay couples"

Link: Washington Blade

Excerpt:

U.S. Rep. Barney Frank (D-Mass.) is looking into a Federal Deposit Insurance Corporation policy that disqualifies domestic partners from receiving coverage available to married couples.

Frank, one of two openly gay members of Congress, is chair of the influential House Financial Services Committee, which oversees legislation and government regulation of the nation’s banks and other financial institutions.

“He will talk to the FDIC to see if they have the authority to do something about this administratively or whether a legislative remedy is needed,” said Steve Adamske, Frank’s press spokesperson.

The FDIC is an independent federal agency that protects Americans against the loss of their deposits in banks and savings institutions in the event that a bank fails. FDIC insurance covers accounts of up to $100,000 per bank or other covered financial institutions and protects against the loss of up to $250,000 for certain retirement account deposits.

The agency also provides $100,000 in insurance protection for each owner of a joint account and any two or more individuals are eligible for coverage in joint accounts, including domestic partners. Under FDIC rules, a same-sex couple opening a joint bank account would be eligible for deposit protection for a total of $200,000, just like a married couple.

But the FDIC restricts its deposit insurance protection for revocable trust accounts to a list of “qualifying” beneficiaries — and domestic partners are excluded from that list.

[...]

Kate Spears, an official with the FDIC’s Division of Supervision & Consumer Protection, said the rules excluding domestic partners from FDIC deposit protection for revocable trusts are based on federal financial statutes as well as on the 1996 Defense of Marriage Act or DOMA.

DOMA bars the federal government from recognizing same-sex relationships and prevents same-sex couples from receiving federal benefits and rights available to opposite-sex married couples.

“You can name anyone you want as a beneficiary to a trust, including a domestic partner,” Spears said.

But she noted that the FDIC cannot provide insurance protection for deposited funds in a trust designated for a domestic partner because domestic partners are not included in the FDIC’s list of qualified beneficiaries.

[jw]

"H&R Block to reimburse gay couples"

Link: Kansascity.com

Excerpt:

H&R Block has agreed to give $100 coupons or free TaxCut software to gay couples who this spring incurred extra costs because Block software prevented them from filing online, said the American Civil Liberties Union of Connecticut.

Connecticut taxpayers Jason Smith and Settimio Pisu and the ACLU sent a demand letter in March to Block, asking the tax preparer to stop penalizing gay couples because the software in use then did not support Connecticut civil union returns. Filers who encountered that problem were asked to contact a Block tax service office for help, for which higher fees were charged.

[jw]

New York: "FAMILY FINANCE - Same-sex marriage a financial boost"

Link: Newsday
by Lynne Brenner

Excerpt:

Gov. David Paterson has directed all New York agencies to recognize same-sex marriages performed elsewhere. Would New York recognition of a California ceremony give me and my partner all the financial advantages of being married? Don't some of those advantages depend on the federal government?

- A.M., Brooklyn

Most financial advantages of marriage are indeed grounded in federal law. But New York's recognition of same-sex marriages performed elsewhere would provide some meaningful legal benefits. For example, state law says if you're married without kids and die without a will, your surviving spouse automatically inherits everything you owned. (If you're survived by a spouse and kids, the law divides your assets between them.)

Of course, you don't have to be married to leave everything to your partner in a will. But when you die, any blood relatives with a potential claim on your estate must be notified and given a chance to contest your will. This is true whether you're gay or straight, married or single.

But the only relatives with legal standing to contest your will are those who by law would inherit your estate if there were no will, or if the will were invalid, says John Oliver, a lawyer at White & Case in Manhattan. If you die single and childless but are survived by your parents, for example, only they can contest your will, because they'd get everything if there were no will. If your parents are dead, your siblings can contest your will. No siblings? Then your aunts and uncles can contest it.

But if the state recognizes your marriage, you have no kids and your will leaves everything to your spouse, nobody can contest it - because your spouse would get everything even if there were no will.

If your marriage were recognized in New York, you and your partner also would have an automatic right to inherit at least one-third of each other's assets, no matter what your wills say, adds Oliver. New York doesn't let you disinherit your spouse.

[...]

The Defense of Marriage Act bans federal recognition of same-sex marriage. To date, the Supreme Court has refused to hear arguments that this act is unconstitutional because it deprives same-sex couples of equal protection under the law. The act also has been challenged as a violation of the Constitution's "full faith and credit" clause, which says states must accept each other's judgments. "If I get a judgment against you in New York and you flee to California, I can get the judgment enforced by a California court," explains Oliver. "A state's pronouncement that two people are married is arguably also a judgment."

[jw]

Gays who wed in California won't have equal marriage rights

Link: San Jose Mercury News

Excerpt:

Thousands of gay couples will marry in California during the upcoming months, but when it comes to the law, not all marriages are created equal.

Same-sex married couples can expect many of the same marital rights as heterosexual couples under state law. But things will be different if they end up in bankruptcy court, take a leave from work or own a vacation home out of state. In those areas, federal law comes into play, and the federal government does not recognize marriages between lesbians or gay men.

[...]

1. TAX BREAKS

There will be more paperwork, but same-sex couples won't get the same tax breaks heterosexual couples enjoy.

[...]

2. WHEN A MARRIAGE SOURS

Next week, it will be easy for gay couples to find someone to declare them married until death do they part. If the vows don't work out, divorcing could be trickier if they live or move outside the state.

[...]

3. DEATH

When the ultimate parting occurs, married same-sex people can inherit a spouse's property without paying hefty inheritance taxes, just like any married couple. They should, however, draw up a will. That's because, unlike married heterosexual couples, they could face problems if they live or travel out of state, or own property outside California.

[...]

4. IMMIGRATION

Marriages between a man and a woman are recognized by the federal government, so a foreign-born spouse in an opposite-sex marriage has the right to apply for U.S. citizenship. That same right does not extend to same-sex couples. One spouse cannot sponsor a same-sex partner to grant immigration status.

[...]

5. CHILDREN

If a child is born into a legal relationship, whether a marriage or a registered domestic partnership, California law assumes both adults are legal parents to that child.

[...]

6. PAYING THE BILLS

Bankruptcy law, a federal law, says that if you declare bankruptcy as a couple, you can retain enough assets to support both spouses. But you won't be able to declare bankruptcy as a couple if you're a same-sex couple, so you can't get the protection.

[...]

7. FAMILY LEAVE

An employer cannot fire a worker who requests a six-week unpaid medical leave to care for a spouse or child. However, since the family leave act is a federal law, this does not apply to gay couples.

[...]

8. IN SICKNESS AND IN HEALTH

Some employers, especially in Silicon Valley, already offer health insurance coverage to registered domestic partners.

More companies are expected to offer it now that same-sex marriage is legal in California. However, a company could claim its headquarters is in a state that does not recognize same-sex marriage and deny benefits to a same-sex spouse. Federal law often limits employees' ability to challenge such different treatment.

But "one of the most unfair tax treatments" by the IRS is when a same-sex spouse is covered by the other's health insurance: The IRS taxes the health benefits as income, but does not for heterosexual spouses, said Brian Chase, senior staff attorney with Lambda Legal.

[...]

9. CRISIS SITUATIONS

In California, same-sex spouses will now have the same rights as opposite-sex spouses in medical emergencies. A spouse, for example, will be able to visit the love of his or her life in intensive care and have the authority to make life-or-death decisions if the partner is too ill to decide.

But, again, if the couple are traveling in a state that does not recognize gay marriages or domestic partnerships, they could be denied those rights.

[...]

10. ON THE ROAD

Same-sex couples traveling out of state should carry copies of their marriage certificate, domestic partnership registration, a health care proxy that authorizes each of spouse to speak for the other and, if they have children, copies of documents that show both adults are parents.

[...]

[jw]

Sweden: High court to rule on marriage dispute

Link: The Local

Excerpt:

A homosexual couple has taken the Swedish tax authority (Skatteverket) to court for registering their marriage in Canada as a partnership.

Lars Gårdfeldt and Lars Arnell, who are both priests in the Swedish church, allege discrimination.

"The tax authorities can make an exception for a marriage where one party is under-age but not for homosexuals," said Lars Gårdfeldt to Svenska Dagbladet.

Skatteverket confirms that it does make exceptions to Swedish law with regard to under-age couples legally married overseas. But only for marriages involving a man and woman.

The Supreme Administrative Court decided on Friday to try the case and rule on whether the Gothenburg couple should be registered as married.

[...]

[jw]

TIAA-CREF Endorses Legislation Calling for Domestic Partner Benefits [tax equity]

Link: Business Wire

TIAA-CREF today announced its support for H.R. 1820, Tax Equity for Health Plan Beneficiaries Act of 2007, introduced by Congressman Jim McDermott (D-WA) in the House and S. 1556, Tax Equity for Domestic Partner and Health Plan Beneficiaries Act of 2007, introduced by Senator Gordon Smith (R-OR) in the Senate. 

The bill would eliminate the inequities in federal tax law by excluding the value of domestic partner health coverage from the taxable income of the employee and from wages for purposes of payroll tax obligations. The bill would correct these inequities for domestic partners and others who qualify as plan beneficiaries under the employer plan but do not meet the tax code definition of spouse or dependent. 

In particular, it would permit a Voluntary Employees’ Beneficiary Association (also known as a VEBA) to provide full benefits to domestic partners or other non-spouse, non-dependent beneficiaries without endangering its tax-exempt status. 

A number of colleges and universities currently provide benefits to domestic partners. Many of these institutions are also considering participating in a tax-exempt VEBA or other similar trusts, as a way to help employees save additional resources to offset the rising cost of health care in retirement. 

“We support those institutions that wish to help cover the retirement health care needs of employees and their dependents,” said Nancy Heller, Senior Managing Director and Head of Institutional Relationships. “We look forward to working as part of the coalition to support passage of legislation that would enable VEBAs to provide full benefits to domestic partners.”

“Every American deserves to be treated with dignity, respect and equal treatment under the law, but that is not happening in the workplace today, because of a glaring inequity that treats a married couple differently than domestic partners when it comes to an employer’s contribution for a health care premium,” Rep. Jim McDermott said. “This is absolutely wrong and I intend to correct this through the Tax Equity for Health Plan Beneficiaries Act.”

TIAA-CREF is the leading retirement system for people who work in the academic, research, medical and cultural fields with more than $419 billion in combined assets under management. The company serves 3.4 million active and retired employees of more than 15,000 institutions. 

TIAA-CREF will advocate for the passage of this legislation. TIAA-CREF is a member of the Business Coalition for Benefits Tax Equity, a group of employers and business trade associations, who also support this legislation. 

About TIAA-CREF

TIAA-CREF (www.tiaa-cref.org) is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields with more than $419 billion in combined assets under management (3/31/08). 

The tax information herein is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties. It was written to support our endorsement of the legislation. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. 

TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity products are issued by TIAA (Teachers Insurance and Annuity Association), New York, NY.

[jw]

OR: Domestic partners law will affect tax returns in ’09

Link: Eugene Register-Guard

Excerpt:

Gay and lesbian couples who have filed as domestic partners in Oregon will have the option a year from now of filing jointly on their state income tax returns.

To do so, they will be advised to fill out a second federal tax form as if they were a married couple.

Oregon’s new domestic partnership law was to have gone into effect Jan. 1 but was delayed until early February, when a federal judge lifted his temporary injunction. The law, approved by the Legislature and signed by the governor last spring, grants marriage-type benefits to same-sex couples.

Domestic partners didn’t have to concern themselves with the new law when filing their current tax returns, which are for taxes owed in 2007 prior to the law going into effect. But that will change next year, when taxpayers base their payments on 2008 earnings.

[...]

In order to correctly compute their state taxes, domestic partners will be advised to fill out a second federal tax form as if they were filing as a married couple, said Rosemary Hardin at the state Department of Revenue.

They can complete the second federal form as if they were a married couple filing either jointly or separately, she said.

In so doing, they will learn their recalculated adjusted gross income for reporting on the Oregon income tax return.

This second federal form should not be sent to the federal government. Instead, it should be submitted with the partners’ state income tax return or returns.

Hardin said the state will have an explainer page on its Web site — www.oregon.gov/DOR — long before filing season next January.

[jw]

Atlanta clergy demand gay ‘tax equality’

Link: Southern Voice Online

Excerpt:

Clergy representing gay and gay-friendly Atlanta congregations gathered in front of the Atlanta Regional Post Office in Hapeville today — the last day to file federal income taxes — to stress economic justice is also a faith issue when it comes to tax equality for gay families.

Rev. Harry Knox, director of HRC’s religion and faith program based in Washington, D.C., also used the press conference to announce HRC is joining with a bipartisan group of members of Congress to unveil a new legislative agenda named “Family Matters.” The agenda will work to pass laws to help same-sex couples, such as the Family & Medical Leave Inclusion Act, the Domestic Partnership tax bill and the Domestic Partnership & Obligations Act.

Approximately 12 people attended the protest, mostly members of local gay affirming churches. Speakers made their remarks from a podium in front of the post office, which is just off I-75.  Many held signs with slogans such as “Tax fairness for gays now!” and “God loves gays.”

“Across the country, millions of same-sex couples face significant financial burdens and legal hurdles in building a secure future for their families,” said Knox, also a former executive director of Georgia Equality.
The Defense of Marriage Act, which bars the federal government from recognizing legal same-sex marriages, denies these couples more than 1,100 federal benefits and protections available to married couples, Knox said

“[W]hich means they can’t take time off to care for a loved one without risk of losing their job, they can’t provide survivor benefits to their partner or children despite paying into Social Security for a lifetime, they can’t get equal pay for equal contribution as a federal employee or veteran … and they can’t include their spouse or children on their employer-based health plan without facing significant tax penalties,” Knox said.

What do faith and economic justice have to do with each other? Having enough money and resources are the core to providing for our families, said Rabbi Joshua Lesser of Congregation Bet Haverim, a synagogue founded by gay and lesbian Jews.

[...]

[jw]