For several years, California law has treated couples in domestic partnerships exactly the same as marriages, including in how income tax returns were filed. But the federal government's DOMA has banned any recognition of same-sex couples as married and the Internal Revenue Service has treated them as though they were two unrelated individuals. This has resulted in the peculiar situation in which a couple files as married for state tax purposes, and then files separate federal returns in which each reports their own individual incomes and deductions.

While it is not true in all cases, quite often this results in same-sex couples paying much higher rates of federal income taxes than they would if they could file jointly, especially when one spouse earns significantly more than the other. It has also resulted in increased time and expense in complying with income tax return preparation.

Now the IRS has issued a memorandum revising its position on the reporting of income from domestic partnerships in California and providing an interpretation that will result in returns that are both easier to prepare and file and also which are more fairly taxed.