August 28, 2007
N.J. Couple Unable to File Joint Taxes Until 2007
In Quarto v. Adams, 2007 WL 2262736 (N.J. Super. Ct. App. Div. Aug. 9, 2007), Judge Sabatino held that a same-sex couple married in Canada on July 28, 2003, could not file a joint tax return for their 2006 income, as their marriage was not recognized in New Jersey until the effective date of the Civil Union Act (Feb. 19, 2007).
The couple was married in 2003 in Canada, filed for a domestic partnership under in New Jersey in 2004 and planned to file joint tax returns for 2006. Prior to filing, they contacted the Office of the Attorney General for an advisory opinion. The Attorney General had previously issued an opinion stating that under the Civil Union Act, adopted following the Supreme Court's Lewis v. Harris opinion, "relationships validly established under the laws of other States and foreign nations [would] be valid in New Jersey beginning on February 19, 2007, either as civil unions or domestic partnerships." Id. at *2.
The tax inquiry was referred to the Acting Director, who explained that the couple could not file a joint tax return for the 2006 work year because their legal status was not recognized in New Jersey until February 19, 2007, "which was after their 2006 income had already been earned." Id.
In fact, the couple would have saved money had they filed separate tax returns for the 2006 year, however, they wished to file jointly for personal reasons. The couple asserted that they were entitled, under Lewis, to all of the rights and benefits provided to hetero-couples and the refusal to permit them to file jointly violates equal protection. Id. at *3.
The court considered the main issue to be one of timing. The court noted that in the Lewis case, the Supreme Court directed the legislature to adopt either a civil unions or same-sex marriage act within 180 days. Id. at *7. The Civil Union Act was enacted on Dec. 21, 2006, but was not effective until "the 60th day after its enactment" or Feb. 19, 2007.
Due to administrative concerns regarding a potential retroactive application of the Civil Union Act (for tax purposes), the court found that the couple could not file jointly for 2006. "For instance, because such same-sex couples could not have filed joint New Jersey returns in prior years, their employers ordinarily would not have withheld appropriate amounts of taxes, so their W-4 forms would have been substantially incorrect." Id. at *8.
Similarly, the court noted that the Taxation Division synchronized taxpayer status with federal law. So, "New Jersey taxpayers must have been married in the year that their income was earned in order to qualify for joint filing status as married persons." Id. at *6. "Because appellants' Canadian marriage was not legally recognized by statute in New Jersey as a civil union until February 19, 2007, appellants are being treated no differently than a truly similarly-situated heterosexual married couple. Id. at *7.
Thus, according to the court, the couple was entitled to a declaratory ruling that they could begin filing their taxes jointly in 2007.
Concurring Opinion: In an interesting concurring opinion, Judge Stern noted that the different treatment for tax purposes of heterosexual couples lawfully married outside of the state versus same-sex couples in the same situation constitutes "a denial of equal protection under the New Jersey Constitution." Id. at *8. However, Judge Stern ultimately concluded that the plaintiffs were only entitled to the declaratory relief provided by the majority of the court for this equal protection violation. He found the administrative reasons offered by the majority to justify its decision "necessary and constitutionally acceptable" even though the due date for filing the 2006 tax return, April 17, 2007, occurs after the effective date of the Civil Union Act. Id. at *9.
Thoughts and musings: Perhaps the concurring opinion opens the door a bit for other jurisdictions facing similar tax conundrums? Other courts could find that a same-sex couple could file jointly if the marriage or union was recognized before the tax filing deadline instead of requiring marriage recognition during the year the income was earned. For additional points regarding the court's reasoning in this case, see Professor Stephen Clark's Blog regarding Conflicts of Laws (noting that the court oddly seemed to defer to an admin. opinion of the attorney general and ignored the common law choice-of-law cases).
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