The "Rainbow Tax": Overcoming Repayment Barriers

Authors

Hannah C. DeLoach

First Page

935

Abstract

In 1996, the Defense of Marriage Act passed through Congress and was signed into law by President Bill Clinton. The Defense of Marriage Act effectively banned same-sex couples from receiving federal benefits that were otherwise available to heterosexual couples. In 2004, the first legal same-sex marriages were performed in the United States of America in the state of Massachusetts. These marriages allowed the now-married couples to access state tax benefits previously unavailable to them. However, because of section 3 of the Defense of Marriage Act, which defined marriage as a union between one man and one woman, those newly married couples could not access the same tax benefits on the federal level. This forced same-sex married couples to file individually on their federal tax returns, even though they could now file jointly on their state tax returns. Because of this, same-sex couples paid collectively almost $57 million more in taxes than they otherwise would have if they had been permitted to file as married on federal tax returns. This overpayment in taxes can appropriately be referred to as the “Rainbow Tax.”

In recent years, there have been three legislative attempts to remedy this overpayment. All three have been headed by Senator Elizabeth Warren of the state of Massachusetts, the state most affected by the inequity. First, the Refund Equality Act of 2017, then the PRIDE Act of 2019, and most recently the Refund Equality Act of 2021—none of these attempts at remedying this inequality have been successful.

This Comment centers on the responsibility of the Internal Revenue Service and the U.S. government to refund the overpayment of taxes to the affected taxpayers and addresses three key issues of the repayment process: the statute of limitations on amending tax returns, the burden of proof in these cases, and calculating interest on these returns.

Recommended Citation

Hannah C. DeLoach, The "Rainbow Tax": Overcoming Repayment Barriers, 26 Lewis & Clark L. Rev. 935 (2022).
Available at: https://lawcommons.lclark.edu/lclr/vol26/iss3/8