Does the IRS discriminate against unmarried couples?
I’m specifically referencing same sex couples in this post because, while traditional unmarried couples may encounter the same kinds of difficulties with the Service, they have an “out” that same sex couples don’t have: marriage.
At my firm, we represent same sex couples in a number of tax and estate planning matters. It is an interesting practice because state laws vary from New Jersey to Pennsylvania – they are much more favorable to same sex couples in New Jersey. And though we often preach to “not let the tax tail wag the dog”, it often does. Since NJ has recognized same sex couples who register as domestic partnerships as “married” for tax and benefit purposes, I know same sex couples who have packed up and headed across the river in search of better circumstances.
It is difficult for me to wrap my head around the idea of suburban NJ as more progressive than Philadelphia. But with respect to taxes, it definitely is.
And yet, despite the classifications of same sex couples in New Jersey and other states as domestic partnerships or marriages, the feds view same sex couples the same way as they do all unmarried adults: as strangers.
Hold your fire… I’m not even talking about extending the economic benefits of married couples to same sex couples (that’s another post for another day). I’m talking about the most simple of tasks: just talking to the IRS.
There is a form (federal form 2848) that allows for another person to talk to the IRS on your behalf. The IRS requires any person who is speaking on your behalf or providing information – including your attorney or tax preparer – to execute this form. It makes sense.
But what doesn’t make sense are the limitations on who may act as your agent in front of the IRS. While a traditional Power of Attorney will allow any person to act on your behalf, the IRS imposes limits on who may interact with the IRS on your behalf.
The limitations are:
a) Attorney—Enter the two-letter abbreviation for the state (e.g., “NY” for New York) in which admitted to practice.
b) Certified Public Accountant—Enter the two-letter abbreviation for the state (e.g., “CA” for California) in which licensed to practice.
c) Enrolled Agent—Enter the enrollment card number issued by the Office of Professional Responsibility.
d) Officer—Enter the title of the officer (e.g., President, Vice President, or Secretary).
e) Full-Time Employee—Enter title or position (e.g., Comptroller or Accountant).
f) Family Member—Enter the relationship to taxpayer (must be a spouse, parent, child, brother, or sister).
g) Enrolled Actuary—Enter the enrollment card number issued by the Joint Board for the Enrollment of Actuaries.
h) Unenrolled Return Preparer—Enter the two-letter abbreviation for the state (e.g., “KY” for Kentucky) in which the return was prepared and the year(s) or period(s) of the return(s) you prepared.
I am particularly struck by item (f) which allows a spouse, parent, child or sibling to act on a taxpayer’s behalf – but no one else. I can’t quite get the public policy argument behind limiting a taxpayer’s right to ask any person to correspond with the IRS on his or her behalf. Clearly, this affects taxpayers other than domestic partners but the limitations (and the agents’ interpretation of same, trust me on this) seem to directly impact same sex couples disproportionately.
I’m baffled as to the reasoning behind such limitations. In any relationship, it is often true that one person is more “in the know” than the other about finances. It is also not unthinkable that a taxpayer may not be available due to incapacity, travel or other circumstances that would enable taxpayer to respond timely to IRS notices – many of which are deadline specific. You would think that IRS would do everything in its power to facilitate taxpayer’s resolution of outstanding matters rather than limit taxpayer’s options.
The restrictions imposed on this form – and the resulting interpretations and actions by many agents – inhibit, not help, taxpayer in the resolution of outstanding tax issues. I just don’t get it. Do you?
I know of a situation where both partners were available to be present at a meeting with the IRS (to discuss both cases). The IRS asserted that while the attorney could remain throughout, ONLY the partner whose case was being discussed at the time would be allowed to remain in the room. The other partner would have to step out of the room. Permission by, desires of, the taxpayer whose case was under discussion was not relevant.