IRS Change Recognizes Gay Calif. Couples

For the first time, the IRS will recognize same-couples in California as a unit for tax purposes, under a new ruling by the agency.

The Wall Street Journal reports on the change, which reverses a 2006 IRS ruling and may also affect Nevada and Washington State couples.

"Specifically, the agency said nearly 58,000 couples who are registered as domestic partners in California must combine their income and each report half of it on their separate tax returns. Same-sex couples account for an estimated 95% of the state's domestic partnerships; partnership status is also available to heterosexual couples in which one partner is over age 62."

Same-sex couples cannot file joint federal tax returns under the Defense of Marriage Act, but in California, community-property rules complicate the issue and call for interpretations.

According to the Journal, "An IRS spokesman said the shift is due to a 2007 change in state law. That change dealt with the way the state calculates income for California taxes. Nevada and Washington state are also community-property states that recognize domestic partnerships, and so couples there may also be affected."

Some critics charge the new ruling contradicts the Defense of Marriage Act.

Watch the Journal's Laura Meckler explain the change in the video.alue="always">