Same-Sex Couples Should Take Exception With The Missing Exemption

by Varnum LLP

In the wake of the recent determination of the unconstitutionality of the Defense of Marriage Act, the mind of a tax attorney begins to wonder about the practical income tax implications for same-sex couples. A recent case seems to demonstrate that there are inequities in how the Internal Revenue Code is applied – completely aside from the DOMA decision - depending on the nature of the taxpayer's personal relationships.

Recently, I represented an individual who was undergoing an IRS exam. As part of the adjustments made by the examiner, the taxpayer was denied an exemption for his significant other who, as it happens, is of the same gender as the taxpayer. As a former attorney for the Office of Chief Counsel for the IRS, this initially seemed to me to be the right decision, since the exemption normally applies to the taxpayer’s children, spouse, or elderly parents. Setting aside any moral judgments, why would a well-to-do man be entitled to take an exemption for his adult, same-sex partner? The answer is surprisingly simple – the Internal Revenue Code.

Before I give away the ending, a brief primer on IRS Code is in order. In the case of an individual taxpayer, an exemption is allowed for that individual and for any dependent of the individual. The Code provides that a dependent is either a “qualifying child” or “qualifying relative.” In this case, the taxpayer’s partner was not a child, so to claim the exemption, he must meet the definition of a qualifying relative.

According to the Code, a qualifying relative is an individual: (1) who bears a certain type of relationship to the taxpayer; (2) whose gross income for the calendar year in which the taxable year begins is less than the exemption amount; (3) with respect to whom the taxpayer provides over one-half of his or her support for the calendar year; and (4) who is not a qualifying child. In my client’s case, the second, third, and fourth elements were met. The question that remained was whether his domestic partner had that “certain type of relationship” necessary to qualify.

In general, taxpayers and return preparers view “typical” family relationships as meeting this standard: brothers, sisters, fathers, mothers, stepparents, nieces and nephews, and in-laws. But according to the Code, an individual who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household is also in a valid relationship, even if they are not related by blood or marriage.

It now seemed clear that the taxpayer’s partner did indeed meet the definition of  “qualifying relative” and therefore was eligible for the dependency exemption. The examining agent was not convinced, however, and, citing the Code, declared that “[a]n individual shall not be treated as a member of the taxpayer’s household if at any time during the taxable year of the taxpayer the relationship between such individual and the taxpayer is in violation of local law."

This is the crux of the matter, and where I question the logic of the Revenue Agent’s position. As a resident of the State of Michigan, I am not aware of any local laws which make same-sex relationships illegal. In fact, many municipalities have enacted ordinances which prohibit discrimination on the basis of sexual orientation. Michigan does not currently allow same-sex couples to marry, but marriage is not an issue here.

For my client, the plain language of the Code provides a strong argument at appeal, and we are appealing the matter. Despite the outcome for my client, however, the question remains: does the Code discriminate against same-sex couples? As a tax professional and advocate for my clients, I am relegated to interpreting the law as it stands. Despite what this particular Revenue Agent proposes, which is that a same-sex relationship is allegedly unlawful in Michigan, I am confident that the Appeals Officer will find our argument persuasive. If not, we are ready to take this issue head-on. Same-sex couples are entitled to take a dependency exemption for their partners – assuming they meet the other requirements.  Stay tuned.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Varnum LLP | Attorney Advertising

Written by:

Varnum LLP

Varnum LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.