Marriage in the Tax Code, Part 8: 1920s Court Battles

wedding-rings-150300_1280This post is part of a larger research project I’m conducting regarding the history of marriage in the U.S. tax code. As I finish sections, I will post them here. This is a long-term project, so I can’t guarantee when the next segment will appear.


In 1927 the U.S. Attorney General issued a new ruling relating to tax treatment of married couples in community property states.

In that opinion, the Attorney General said all community property states have different laws, so he was withdrawing his earlier opinion that said community property law applied in all community property states except California.

Instead, the Attorney General said the issue would be decided in a series of test cases – one from each state (including California again) – that would go before the U.S. Supreme Court.

Professor Pat Cain picks up the story from there:

In August of 1928, spouses from four community property states, Arizona, Louisiana, Texas, and Washington, filed test cases in federal district court.  In every case, the spouses had reported community income by allocating half to the husband and half to the wife.  In every case, the Internal Revenue Service refused the returns and instead assessed a tax against the husband, allocating 100% of the community income to him. The husbands in each case paid the tax and sued the local Collector of Internal Revenue in federal district court, claiming a refund in the amount of the additionally assessed tax. Ultimately these cases were consolidated and heard by the Supreme Court. In the lead case, taxpayer/husband Seaborn sued Burns Poe, the Collector of Internal Revenue for the District of Washington.

Source: Professor Cain’s research paper “Taxing Families Fairly,” available here.

Poe v. Seaborn, which was decided in 1930, would become a landmark case in taxation of community property. Indeed it is still referenced today in issues relating to taxation in community property states – including a key IRS ruling in 2010 that affected same-sex married couples and registered domestic partners in community property states.

The Supreme Court sided with the taxpayers in Poe v. Seaborn, and also sided with taxpayers in the other companion cases, including California. The result was, income splitting between spouses in all community property states was allowed.

While there were protests from the government and from married couples in common law states, the wheels of governmental change move slowly. It would take another 18 years after Poe v. Seaborn before filing statuses were created and equality would be achieved between married couples in common law and community property states.