Exempt from the Law

In 1999, California enacted a “domestic partnership” law that gave same-sex couples many rights once reserved for married couples.

One right it did not give them was recognition of their relationship under federal tax law. In 1996, Congress passed and the President signed the Defense of Marriage Act (or DOMA), which, for purposes of federal law, defined marriage as between one man and one woman.

The act specifically excluded domestic partnerships, such as those in California, from the benefits extended to married couple under federal tax laws.

Since DOMA was enacted three years before California’s domestic partnership law, that should have settled the issue about same-sex couples in California and federal taxes.

Or so you would think.

In 2005, California extended to domestic partnerships its “community property” laws, which require “married couples to treat all income as joint property for a variety of purposes.” By itself, this shouldn’t have changed the federal tax treatment of domestic partnerships.

But when it comes to the gay agenda, nothing is ever a matter of “by itself.” In 2005, a same-sex couple asked the IRS for a ruling on how the new California law affected their filing status. The IRS initially ruled that it didn’t affect it, because previous rulings regarding joint filing status and community property didn’t apply “outside the context of a husband and wife.”

Four years and a different administration later, the IRS reversed itself. While domestic partnerships still cannot file jointly, they, like married couples in California, can split their total income in half when they file their individual federal returns.

In cases where one partner earns a lot more than the other, this can result in substantial tax savings. In other instances, the savings are smaller or even non-existent.

In any case, saving a few bucks come tax time was not what the case was really about. As the man who requested the ruling told the Wall Street Journal, “For the first time ever, I’m able to file federal taxes that, in a small way, acknowledges what’s going on in my relationship.”

It isn’t only California couples who stand to benefit from the ruling: Washington and Nevada have similar laws.

What’s outrageous about the IRS ruling is that unelected officials acted contrary to the clear congressional instructions. David Herzig, a professor of tax law at Valparaiso, told the Journal that DOMA prohibits this kind of “acknowledgment” regardless of state law. As he put it, “we shouldn’t be picking and choosing where these rules apply.”

Apparently some IRS lawyers and administration officials think otherwise. This disregard for the law and the democratic process has been standard operating procedure for gay rights activists.

When we play by the rules and succeed, they and their allies change the rules or, as in this case, ignore them.

Unfortunately, elite opinion will never acknowledge what’s really going on in this relationship between citizens and the rule of law. And that’s the most taxing part of all.

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