On Feb. 13, 2014, Idaho Gov. C.L. “Butch” Otter signed H.B. 375 into law after the bill was unanimously backed by state Republicans in the Legislature. H.B. 375 prohibits same-sex married couples who can file jointly for federal income tax purposes from doing so for state tax returns. Thus, the only option for a same-sex married couple is to file as single or, if qualified, as head-of-household.
As revised, Idaho Code § 63-3004(c) reads:
For all purposes of the Idaho income tax act, a marriage must be one that is considered valid or recognized under section 28, article III, of the constitution of the state of Idaho and defined in section 32-201, Idaho Code, or as recognized under section 32-209, Idaho Code.
In Idaho, however, this measure to ban same-sex married couples from filing jointly is superfluous and redundant (redundancy intended). Under Section 28, Article III of the Idaho Constitution, only marriages between a man and a woman are valid or recognized in the state. Therefore, this statute amounts to Idaho’s legislature reiterating the state’s constitution. Some would posit that such legislation amounts to speech of the Idaho Legislature.
As we have observed in other states with similar constitutional prohibitions (and/or state law prohibitions) on same-sex marriage, the respective state’s department of revenue or equivalent agency will issue guidance reiterating the state’s position on same-sex marriage (see, e.g., South Carolina, Virginia, Ohio, North Carolina, Kansas, Louisiana, Wisconsin; but see Missouri for a divergent approach). In Missouri, the governor issued an executive order to enable same-sex married couples who file joint federal income tax returns to file joint state tax returns despite the state’s constitution prohibiting the recognition of same-sex marriages. Using Missouri as an example, signing H.B. 375 into law would effectively tie a future governor’s hands on the issue and prevent the Idaho State Tax Commission from issuing contrary guidance.
The Multistate Tax Update will continue to follow developments in the wake of the U.S. Supreme Court’s ruling in United States v. Windsor, as well as Revenue Ruling 2013-17 (holding, in part, that: (1) “husband” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage; and (2) a marriage of same-sex individuals that was validly entered into in a state whose law authorizes the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages). These holdings continue their ripple effect throughout the United States at both the federal and state levels. To be sure, a multitude of state legislation, rulings, guidance, and litigation will continue to ensue as a result. If you have questions on how these holdings or other developments may affect you or your business, please contact us.