Weekly Round-Up: Illinois Reverses Its Position on Tax Treatment of Civil Unions

 The Illinois Department of Revenue, according to a department official, has reached an agreement with civil rights organizations that will permit same-sex couples in civil unions to file their state income tax returns jointly, BNA staff correspondent Michael Bologna reports.

The new policy, which will be available to taxpayers for the 2011 tax year, “represents a reversal from the department's previous legal interpretation with respect to the Illinois Religious Freedom Protection and Civil Union Act (Public Act 96-1513),” according to Bologna. Civil rights groups said the change makes Illinois the 10th state, together with Washington, D.C., to permit same-sex couples to file joint state tax returns, Bologna writes.

“Bernard Cherkasov, chief executive officer of Equality Illinois, applauded Gov. Pat Quinn (D) and the revenue department for abandoning the highly technical legal interpretation released in June, which denied same-sex couples recognized under the civil union statute from the same tax filing options available to married spouses,” Bologna explains.

“Following Quinn's enactment of Public Act 96-1513 on Jan. 31, the department issued an interpretation holding that joint filing would be impermissible for same-sex couples because a taxpayer's filing status under the Illinois Income Tax Act (IITA) must mirror the filing status on his or her federal income tax return,” Bologna’s article explains.

As the federal Defense of Marriage Act prohibits the filing of joint returns by partners in a civil union, the department reasoned it had no authority under the IITA to engineer a filing status system that deviated from the federal scheme, Bologna writes. "On that point, the department noted that the new law amended several state statutes to extend marriage-style rights to partners in a civil union, but made no such changes to the IITA," according to Bologna’s article.

“Quinn directed the revenue department to reconsider the policy after the American Civil Liberties Union and Equality Illinois, representing lesbian, gay, bisexual, and transgender individuals, threatened to sue the state,” Bologna explains.

For a closer look at this development, check out Michael Bologna’s article in this week’s issue of the Weekly State Tax Report, which can be read in its entirety here.

In other developments…

Martin Swant, of The Birmingham News, reports that Alabama’s Streamlined Sales and Use Tax Commission approves a preliminary plan to simplify the system.

Sutherland reviews some new bills out of North Carolina and Delaware.

Scott Drenkard, at the Tax Foundation, reports that a sales tax increase is going to the ballots in South Dakota.

Compiled by Priya D. Nair
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