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Ohio: Another state with a constitutional prohibition on same-sex marriage issues special form for same-sex couples

Last week, the Ohio Department of Taxation (the “Department”) issued Schedule IT S, entitled Federal AGI To Be Reported by Same-Gender Taxpayers Filing a Joint Federal Return. This form is used to separate various line items that would be reported together on a same-sex married couple’s federal tax return. The only filing status options available for such couples who are legally married in another state are single, or if qualified, head of household.

Interestingly, Ohio is more progressive than other states in terms of the flexibility of same-sex married couples’ filing options – same-sex couples can file the entirety of their tax returns electronically by checking a new box on the state’s income tax return indicating that the filer will be attaching a Schedule IT S.

For those who would like the Department to alter its position on this issue, it is unlikely in the near future. The Department’s hands are tied in light of Article 15, Section 11 of the Ohio Constitution, which provides:

Only a union between one man and one woman may be a marriage valid in or recognized by this state and its political subdivisions. This state and its political subdivisions shall not create or recognize a legal status for relationships of unmarried individuals that intends to approximate the design, qualities, significance or effect of marriage.

Various groups are organizing an effort to repeal Article 15, Section 11, but this can only be achieved by an amendment to the Ohio Constitution, or a finding by the U.S. Supreme Court that this provision under the state’s constitution is unconstitutional under the U.S. Constitution. Neither effort is likely to gain traction in the near future, although an amendment would be the more expeditious route for change at this point. The next time such a vote is likely to take place would be November 2014, assuming the measure receives the requisite backing.

The Plain Dealer published an article this week discussing the circumstances where Ohio’s stance on same-sex marriage would actually cause married same-sex couples to wind up paying less tax than they would otherwise pay if their marriage were recognized in Ohio.

The Multistate Tax Update will continue to follow developments in the wake of the Court’s ruling in United States v. Windsor (striking down Section 3 of the Defense of Marriage Act (DOMA) on grounds that the federal interpretation of "marriage" and "spouse" to apply only to heterosexual unions is unconstitutional under the Due Process Clause of the Fifth Amendment), 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 have only begun 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.

Click here to review Ohio Schedule IT S.

Colorado: Marijuana tax ballot measure doesn’t go up in smoke

Colorado Ballot Issue AA, Retail Marijuana Taxes, passed handily in a vote on November 4, 2013 with a favorable vote rate of 65 percent. The measure imposes a 15 percent excise tax on unprocessed marijuana when it is first sold or transferred by a marijuana cultivation facility and an additional sales tax of 10 percent on the retail sale of marijuana. These taxes are in addition to the existing sales tax of 2.9 percent on ordinary retail sales in Colorado.

Compared to rates now existing on other typical sin tax targets, marijuana is taxed at a very high margin. For comparison:

Alcohol, which is taxed by volume, is taxed as follows:

  • Beer is 8 cents per gallon (about 9 cents per 12 pack)
  • Wine is 28 cents per gallon (about 6 cents per 750 ml bottle)
  • Liquor is $2.28 per gallon (about 46 cents per 750 ml bottle)

Cigarettes are taxed at 84 cents per pack.

These items are still subject to state sales taxes, as well as any applicable federal or local taxes imposed.

For additional information regarding these subjects or any other multistate tax issues, please contact:

David M. Kall

Susan Millradt McGlone

Jeremy J. Schirra

Businesses must be vigilant and careful in managing their state and local tax liabilities and exposures. We understand this can be a daunting task. McDonald Hopkins Multistate Tax Services provides a broad range of state and local tax services including tax controversy, tax evaluation, tax planning, and tax policy. With professionals who have worked both inside and outside government agencies, our multistate tax team leverages its knowledge and experience to help clients control their complex multistate taxes.