The Internal Revenue Service is refusing to recognize gay marriages, causing headaches for couples who have won the right to wed in their home states, BusinessWeek finds. The Obama administration has urged federal agencies to extend benefits as far as they can to same-sex couples under existing law, but analysts say the IRS has little scope for stretching the rules without running afoul of the Defense of Marriage Act, which defines marriage as being between a man and a woman.
Same-sex couples are left with no option but to fill out a "dummy" federal return as well as joint returns, says a lawyer specializing in estate planning for same-sex couples. "You just spent decades getting your marriage recognized, and now the feds say, ‘No, you’re not,'" he grumbles. Under current IRS policy, same-sex partners inheriting large estates are forced to shell out up to 35% in estate taxes which heterosexual spouses would not have to pay. (Read more gay rights stories.)