Should Same-Sex Couples Be Able to Jointly File Federal Tax Returns & Get Retroactive Refunds? (H.R. 3299)

What is H.R. 3299?

(Updated March 3, 2020)

This bill — the PRIDE Act of 2019 — would amend the Internal Revenue Code to provide for equal treatment of same-sex married couples by striking references to “husband” and “wife” and replacing them with “spouse.” It would permit such couples to amend their filing status to married filing jointly for tax returns outside of the statute of limitations and modify tax rules relating to married couples to include same sex couples. This would allow married same-sex couples to receive the same tax treatment as heterosexual married couples.

This bill’s full title is the Promoting Respect for Individuals’ Dignity and Equality Act of 2019.

Argument in favor

Same-sex couples in certain states that legalized same-sex marriage early, such as Massachusetts, were forced to file separate tax returns for nearly a decade and should have access to retroactive refunds.

Argument opposed

Same-sex couples shouldn’t be able to retroactively claim tax refunds from years before the Supreme Court’s decision when they filed individual tax returns.

Impact

Married same-sex couples; married same-sex couples who previously filed separate tax returns prior to the Windsor decision; tax treatment of same-sex couples; the IRS; and the Internal Revenue Code.

Cost of H.R. 3299

The Joint Committee on Taxation estimates this bill would have a negative revenue effect of approximately $57 million over the period 2019-2024.

Additional Info

In-Depth: Rep. Judy Chu (D-CA) introduced this bill to remove gendered language like “husband” and “wife” from the tax code to accommodate same-sex couples and correct the tax code to allow same-sex couples who married before the Defense of Marriage Act (DOMA) was struck down to claim federal tax refunds to which they’re entitled: 

“Pride month is a chance for us to celebrate equality, and the victory that all love is equal. However, that is not the case in our tax code where discriminatory language and restrictions are still intact. That is why I am proud to be introducing the PRIDE Act to make some common sense fixes to the tax code. First, it will erase gendered language that left out same sex couples by only referring to a husband and a wife. We know that families come in all forms and it’s time our federal paperwork reflect that. Second, this bill will correct an older injustice against same-sex couples and put money directly back into the pockets of families who have earned it. For too long, discriminatory laws penalized same-sex married couples by denying them the ability to file jointly and claim tax refunds they were entitled. That injustice was finally corrected in the 2013 U.S. v. Windsor decision, but restrictions in the code still prevent many of those families from claiming refunds for prior years. For instance, since certain states, including California Connecticut, California, Iowa, New Hampshire, Vermont, and Washington, D.C., adopted marriage equality before the ruling, some legally married same-sex couples were forced to file separate federal income taxes for years. Because of IRS restrictions, these couples cannot amend their returns to claim reimbursement credits for many prior tax years. The PRIDE Act solves this problem.”

Sen. Elizabeth Warren (D-MA), a candidate for the 2020 Democratic presidential nomination and sponsor of this bill’s Senate companion legislation, the Refund Equality Act of 2019 (S. 1940), observes, “The federal government forced legally married same-sex couples in Massachusetts [which legally recognized same-sex marriage in 2004] to file as individuals and pay more in taxes for almost a decade.”

This bill unanimously passed the House Ways and Means Committee by voice vote with the support of four Democratic cosponsors. Sen. Warren’s Refund Equality Act of 2019 has 42 Senate cosponsors, including 41 Democrats and one Independent, and has yet to receive a committee vote.

Sen. Warren first proposed this idea in 2017, when she introduced the Refund Equality Act of 2017 (S. 1564) with 36 Senate cosponsors’ support (35 Democrats and one Independent). At that time, Rep. Richard Neal (D-MA) introduced companion House legislation (H.R.3234, also the Refund Equality Act of 2017) with 40 Democratic House cosponsors. Neither bill received a vote last Congress.

Of Note: Until the Supreme Court’s 2013 decision in , legally-married same-sex couples were barred from filing federal taxes jointly. Before this point, same-sex couples in 10 states received the right to legally marry. In its ruling in , the Court held that it was unconstitutional for a same-sex spouse to be assessed an estate tax for receiving an inheritance from their spouse (whereas an opposite-sex spouse would have been exempt). Through this ruling, the Court overturned the DOMA prohibition that prevented the federal government from recognizing same-sex marriage and allowed same-tax couples in valid marriages recognized by their states to file federal taxes using the preferential filing status of married filing joint.

While the IRS published guidance after the decision clarifying its recognition of same-sex marriages and stating that married same-sex couples could amend previously-filed tax returns to claim refunds or credits due as a result of correct marital status, married couples who previously filed taxes separately are currently only permitted to file amended joint returns going back three years (and the IRS doesn’t have the authority to override this limitation). 

Thus, same-sex couples who were married in jurisdictions recognizing same-sex marriage prior to aren’t able to claim refunds for all years they were legally married. Such couples are entitled to an estimated $57 million in refunds, according to the Joint Committee on Taxation.

Media:

• Sponsoring Rep. Judy Chu (D-CA) Press Release
  
• Joint Committee on Taxation - Estimated Revenue Effects
  
• Mic
  
• Advocate