Civil Unions and State Taxes

A story in the Hartford Courant last week highlights the burdens faced by same-sex couples in states that legally recognize same-sex relationships when they go to file their state tax returns.

But, first, a little background: Because many states use the federal income tax as a base for their own income taxes and the federal government does not recognize same-sex relationships, same-sex couples in legally recognized relationships cannot simply use their federal returns as a basis for their state filings (as different-sex married couples can). As a practical matter, then, this usually means that the same-sex couple has to prepare two separate”single”federal returns to  file with the federal government and then a mock”joint”federal return to use as a basis for completing their joint state return. (For more on this problem and the even worse problem of what happens to couples when they move from one state to another, check out this note by one of my students: Catherine Martin Christopher, Note, Will Filing Status Be Portable? Tax Implications of Interstate Recognition of Same-Sex Marriage, 4 Pitt. Tax Rev. 137 (2007).)

Now, back to the story: A Connecticut couple that had entered into a civil union was completing their tax returns online using the H&R Block web site when the following message popped up: “We don’t support Connecticut Civil Union returns.” At the most immediate level, H&R Block could have put a bit more thought into how best to phrase the message that this was a software issue. After all, the story implies that the Connecticut couple initially took the statement to represent H&R Block’s position on the propriety of legally recognizing same-sex relationships in Connecticut). More troubling, however, is the fact that the couple was told by H&R Block that it was willing to prepare the return in one of its offices—but at a price of about $200, which is $155 more than the online price for preparing returns.

The ACLU has now stepped into the matter, asking H&R Block to cease discriminating against civil union couples—in violation of Connecticut’s prohibition against denying full and equal accommodation on the basis of sexual orientation or civil union status. (In the interest of full disclosure: I am on the Board of Directors of both the ACLU of Pennsylvania and its Pittsburgh Chapter—and my involvement in the organization is in large part motivated by the great work, just like this, that the organization does on behalf of LGBT individuals.) H&R Block is now studying how it can provide online support for civil union couples. Oddly enough, H&R Block has managed to accommodate Massachusetts couples that have entered into same-sex marriages, which should raise similar issues. But this just goes to underscore the point that civil unions are not the same as marriage, no matter what the law says. (For more on this, see this story in the New York Times and this report from the New Jersey Civil Union Review Commission.) The story notes that TurboTax supports civil union returns and actually advises clients to buy its software rather than complete the return online using TurboTax, because it comes out cheaper for the client.

-Anthony C. Infanti