INDIANAPOLIS (AP) -
Conflicting state and federal policies will likely cost Indiana same-sex
couples more when they file their tax returns this year, experts say.
Revenue Service decided to recognize gay marriages after the U.S. Supreme
Court struck down sections of the Defense of Marriage Act. But about half of
the nation’s states have not adopted the federal tax policy, and a measure
introduced in the General Assembly last week is on track to ensure Indiana
does not either.
Revenue spokesman Bob Dittmer said staff analyses show that keeping the
current policy shouldn’t cost the state or individuals more on actual taxes,
but lawyers and accountants say the price tag for filing likely will be
The split means
Indiana same-sex couples who choose to take advantage of the new federal
policy will have to prepare five tax returns this year: one jointly for
federal taxes, two each to file separately for the state and two mock
federal returns with the split assets, said John McGowan, who heads the
lesbian, gay, bisexual and transgender practice at Northern Trust. The mock
federal returns would be the basis for the separate state returns.
Each one can take
time, and money, to prepare.
“That’s one of the
true burdens that same-sex couples face when they’re living in a
non-recognition state,” McGowan said. “There are tangible costs associated
resident Tim Orient said he expects to pay nearly twice the previous fees
for his tax returns this year now that his marriage to his husband is
recognized by the federal government. He said he spent about $400 on tax
preparations for himself last year.
frustrated with all this,” Orient said.
for the state and joining them for the federal filings also could mean
same-sex couples in states that don’t recognize their marriages will be
flagged for audits because each spouse will only report a fraction of their
combined income to the state, said Anthony Infanti, a University of
Pittsburgh law professor who specializes in tax issues for same-sex couples.
Dittmer said there
are no concerns about Indiana same-sex couples being audited because of the
new federal policy.
Indiana was on
track to match IRS tax policies this year until Sen. Brandt Hershman, R-Buck
Creek, made a late-session change that would prevent the state from adopting
the same-sex marriage provision. Indiana does not recognize gay marriage.
negotiations on the bill - which would maintain current policy prohibiting
same-sex married couples from filing joint state tax returns - are underway.
Final approval from the General Assembly and Gov. Mike Pence is needed
before the bill can become law.
Hershman says the
changes would prevent conflicts between the state ban and tax code, which
have led to lawsuits in other states.
“Frankly, that is a
different issue for a different bill,” Hershman said. “It would not be
appropriate ... for us to adopt that change that would be in direct conflict
with state law.”
recognizing same-sex marriages for tax purposes only, even though the state
constitution bans the practice. Gov. Jay Nixon’s executive order spurred
lawsuits both by those hoping to legalize gay marriage in the state and
those who say the measure is unconstitutional.
A Missouri House
Republican last week filed a resolution to impeach Nixon for the order.
The rapid pace of
changes to gay-marriage policies also means software companies have to
monitor district courts and legislation closely, and Dittmer said there
currently isn’t a clear way to track whether same-sex couples are not filing
jointly already in Indiana.
“The systems have
not been able to keep up with the pace of these changes,” McGowan said.
“We’re going to be operating on the honor system for some period of time
before the system is enhanced to help enforce legislation and policies.”
different same-sex marriage tax laws likely will unearth discrepancies and
other complications with federal policy with time, Infanti said.