The Utah State Tax Commission yesterday reversed Governor Gary Herbert (R), ruling that same-sex couples may file their 2013 state tax returns as married, as long as they wed before the end of last year. The ruling also applies to couples who married in other jurisdictions.
As I discussed in my last TaxVox post, the governor ordered state agencies to ignore same-sex marriages performed in Utah during the brief period they were allowed under court order. When U.S. Attorney General Eric Holder subsequently ruled that those couples could file joint federal tax returns, tax filing became more complicated for affected couples.
The tax commission’s reversal undoes those complications in Utah, at least for 2013. Utah thus joins Oregon and Colorado, states that do not recognize same-sex marriages but nonetheless allow same-sex couples to file joint state tax returns if they file joint federal returns.
The situation in Utah could be short-lived. The tax commission emphasized that their ruling applies only to 2013 tax returns. Utah has appealed the judicial decision that allowed same-sex marriages in the state. If the decision is reversed, marriages performed during the brief period they were allowed could simply evaporate.
The tax commission promised couples who file joint returns based on the ruling that they would “not be subject to penalties for any tax deficiencies resulting solely from following this guidance.” If the appeals courts rule against them, those couples might have to amend their 2013 state tax returns—and possibly federal too—but at least they wouldn’t incur penalties.
But that outcome would leave a glaring inconsistency: the state is now on record as recognizing same-sex marriages performed outside of Utah but (assuming appeals courts agree) it constitutionally wouldn’t allow such marriages to occur in the state. That suggests that Utahns in same-sex relationships could marry outside the state and Utah would treat them as married, at least as far as state taxes are concerned.
The Supreme Court ruled last summer in U.S. v. Windsor that the federal government could not refuse to recognize same-sex marriages. In dissent, Justice Antonin Scalia wrote that the court had left “the second, state-law shoe to be dropped later, maybe next Term.” Until the Supreme Court drops that second shoe, we’ll likely watch states and lower courts stumble their ways toward workable and lasting solutions.