Mr. Steven T. Miller

The Honorable William J. Wilkins

December20, 2012

Page 1 of 3

December20, 2012

Mr. Steven T. Miller

Acting Commissioner

Internal Revenue Service

1111 Constitution Ave., N.W.

Washington, DC 20224

The Honorable William J. Wilkins

Chief Counsel

Internal Revenue Service

1111 Constitution Ave., N.W.

Washington, DC 20224

RE:Questions and Answers for Registered Domestic Partners and Same-Sex Spouses in Community Property States

Dear Messrs. Miller and Wilkins:

The American Institute of Certified Public Accountants (AICPA) respectfully requests that the Internal Revenue Service (IRS) consider providing additional tax return filing information for registered domestic partners and same-sex spouses in community property states. Specifically, we suggest that you revise the frequently asked questions (FAQs) posted on IRS.gov to address the statute of limitations for and the implications of filing amended tax returns, provide additional information on the additional tax liability and/or refund consequences of amended returns in a community property state, and consider waiving penalties on these amended returns.

The AICPA is the world’s largest member association representing the accounting profession, with nearly 386,000 members in 128 countries and a 125-year heritage of serving the public interest. Our members advise clients on federal, state and international tax matters and prepare income and other tax returns for millions of Americans. Our members provide services to individuals, not-for-profit organizations, small and medium-sized businesses, as well as America’s largest businesses.

The requested clarification involvesa specific question and answer (Q&A)[1] regarding information for registered domestic partners and same-sex spouses in community property states:

Q. Are registered domestic partners who reported income without regard to community property laws required to amend their pre-2010 returns to each report half the combined community income of the partners?

A. Registered domestic partners who reported community income without regard to community property laws for a taxable year beginning before 2010 are generally not required to amend those returns to report half of the community income. The following rules apply for taxable years prior to 2010:

  • Registered domestic partners in California received full community property rights in 2007. Thus, in California, registered domestic partners may, but are not required to, amend their returns for taxable years beginning in 2007, 2008 and 2009 to report half of the community income of the partners.
  • In Nevada, the state’s community property laws apply to registered domestic partners as of October 1, 2009. Thus, registered domestic partners may, but are not required to, amend their returns for a taxable year beginning in 2009 to report half of the community income of the partners for the period beginning October 1, 2009, and ending on the last day of the partner’s 2009 taxable year.
  • In Washington, the state’s community property laws apply to registered domestic partners as of June 12, 2008. Thus, registered domestic partners may, but are not required to, amend their returns for a taxable year beginning in 2009 to report half of the community income of the partners. For 2008, the partners may, but are not required to, amend their returns to report half of the community income of the partners for the period beginning June 12, 2008, and ending on the last day of the partner’s 2008 taxable year.
  • In all cases, if one of the partners amends his or her return to report half of the community income, the other partner must report the other half.

In order to provide taxpayers with the information necessary to determine if and when they should file amended tax returns, the AICPA recommends that you provide additional information regarding the following issues: (1) the application of the statute of limitationsand (2) the interest and penalty consequences.

Specifically, we recommend that the IRS add a statement to the above Q&A to inform individuals that they may only amend a tax return if the statute of limitations is open. You may also want to consider adding a brief explanation of how to determine whether the statute is still open.

We also suggest that the IRS provide information on the website on the potential negative consequences of filing amended returns. As you are aware, when registered domestic partners or same-sex couples file an amended return to report their income as community property, one taxpayer will owe tax and the other taxpayer will get a refund. We request that this fact and its consequences be described in a new Q&A. We would also appreciate if the IRS would clarify whether taxpayers should file both tax returns in the same envelope or label the returns in any special manner to aid in processing.

Finally, we encourage the IRS to consider waiving any penalty applicable to filing an amended return under these circumstances since the reason for the amended returns is the changed position of the IRS on how these individuals should file their returns.

We appreciate your consideration of our recommendations. We believe these changes to the Q&As will be helpful to both individuals and tax return preparers who are considering whether to file amended returns. In addition, the clarification should help the IRS by reducing the number of amended returns filed for which the statute of limitations has expired.

If you have any questions, please contact me at (304) 522-2553 or ;Jonathan Horn, Chair of the AICPA Individual Income Taxation Technical Resource Panel, at (212) 744-1447 ; or Abraham Schneier, AICPA Senior Technical Manager, at (202)434-9229 or .

Sincerely,

Jeffrey A. Porter, CPA

Chair, AICPA Tax Executive Committee

cc:Erik H. Corwin, Deputy Chief Counsel,Office of the Chief Counsel,Internal Revenue Service

Jennifer L. Best,Senior Attorney Advisor, Deputy Commissioner for Services and Enforcement,Internal Revenue Service

[1]At the time of our letter, the FAQ was available on