Estate Seeks Tax Refund Based on Same-Sex Common Law Marriage

Olga Kucerak, Independent Administrator of the Estate of Susan M. Wood,
Plaintiff
v.
United States,
Defendant

UNITED STATES DISTRICT COURT
for the
Western District of Texas

San Antonio Division

No Jury Trial Requested

COMPLAINT

Jurisdiction, Venue and Administrative Procedures

1. Jurisdiction and venue is proper in this court under 28 U.S.C.A. § 1346 (2021) because this suit concerns a Claim for Refund of Federal Estate Taxes paid by the Estate of Susan M. Wood (the “Estate”) which is domiciled in San Antonio, Texas.

2. Plaintiff, the Estate, timely filed with the Internal Revenue Service (“IRS”) a Claim for Refund for overpaid federal Estate Taxes of $1,156,319. The Claim for Refund was denied by the initial IRS Examination and again denied by the IRS Appeals Office.

Factual Background

3. Since meeting in college at Texas Christian University, Susan M. Wood had a continuous loving relationship with Gerry L. Saum; and, the two continuously lived together as a ”committed couple” and “life partners” until Susan passed away on May 4, 2012 at the age of 66. That's about 45 years of life together.

4. During this 45-year time, Texas did not recognize marriages between 2 women. Accordingly, the Estate could not qualify for the Estate Tax marital deduction under 26 U.S.C.A. § 2056 (2021) for assets passing to her “life partner,” Ms. Saum, and therefore, the Estate paid substantial Estate Taxes.

5. During this 45-year time, Ms. Wood and Ms. Saum were viewed by many friends and people who knew them as “life partners” and a “committed couple.” Ms. Saum and Ms. Wood presented themselves to their friends as a couple and were viewed that way by people who knew them even though, during their entire life together, Texas did not recognize marriages between persons of the same sex.

6. During this 45-year time, the Estate can produce several instances of representations to others that Ms. Wood and Ms. Saum were 'life partners,” a “committed couple” and other words to that effect.

7. During this 45-year time, the Estate can produce evidence of acts or conduct by Ms. Wood and Ms. Saum which conveyed to others that Ms. Wood and Ms. Saum were 'life partners,” a “committed couple” and similar descriptions of their relationship.

8. In 2015, the Supreme Court decided Obergefell v. Hodges, 135 S. Ct. 1732 (2015) holding that the federal and state governments must recognize marriages between same-sex partners under both the Due Process Clause and the Equal Protection Clause of the Fourteenth Amendment to the Constitution.

Due Process Legal Argument

9. Under Obergefell and the Due Process Clause, the right to marry is a fundamental right and any impingement of it is subject to strict scrutiny, requiring a compelling state interest.

10. With only a few exceptions, Supreme Court decisions always have retroactive effect. See generally, J.B. Corr, “Retroactivity: A Study in Supreme Court Doctrine as Applied”, College of William & Mary Law School Repository (1983).

11. The Estate's Claim for Refund with the IRS asserted that the retroactive effect of Obergefell requires the IRS to apply the marital deduction under 26 U.S.C.A. § 2056 (2021) so as to remove any discrimination constitutionally forbidden by Obergefell.

12. As § 2056 looks to state law to determine if a couple is “married,” the 45-year relationship of Ms. Wood and Ms. Saum must under Obergefell have the same ease of access to the Texas “common-law marriage“ statute in Texas Family Code, § 2.401 (2021) as any other “opposite-sex” couple had during that 45-year period.

13. What matters under this retroactive Constitutional analysis is not how this couple was actually treated by Texas law during these 45 years; but instead, how they should have been treated if Obergefell had then been the law. No discrimination is permitted unless justified by a compelling state interest.

14. The 3 elements of Texas “common-law marriage' are : (1) an agreement to be married, (2) sufficient co-habitation, and (3) holding out to others that the couple is married.

15. Under Texas case law, 45 years of continuous co-habitation can establish both : (1) an “implied” agreement to be married, and (2) co-habitation. The Estate can also present witnesses and documents establishing these 2 elements.

16. The main disagreement with the IRS is their insistence that the Estate must show instances where the couple said they were “married.” For a traditional couple, this is reasonable because Texas law always recognized that “opposite sex” couples can use the statute. The traditional couple is not required to say anything that the community would view as legally incorrect.

17. However, requiring a same-sex couple to represent that they are ”married” during this 45-year period is an unreasonable burden on a same-sex couples' fundamental right to marry. As applied, the Texas “common-law marriage” statute must not unduly burden a same — sex couple by requiring them to publicly state something that was clearly not legally correct until Obergefell was decided in 2015.

18. The Estate can show many representations by Ms. Wood and Ms. Saum during the 45-year period that they were “life partners” and a “committed couple.” The Estate can further show conduct and acts by them during the relevant 45-year period that conveyed to others that they were “life partners” and a “committed couple.”

19. To avoid rendering the Texas “common-law marriage“ statute and the federal Estate Tax marital deduction statute unconstitutional “as applied” to the Estate, these assertions of being “life partners” and a “committed couple” over this 45-year period must be accepted as the equivalent of a traditional couples representations that they are “married”.

20. No compelling governmental interest justifies these burdens on a “same-sex” couple's fundamental right to marry using the Texas “common-law marriage” statute

Equal Protection Legal Argument

21. As Obergerfell makes the right to marry a fundamental right, the court applies “strict scrutiny” to disparate treatment between a traditional couple and a same-sex couple.

22. The Estate contends that requiring a same-sex couple to say they were “married” invidiously discriminates against them because opposite-sex couples can access the Texas common law marriage statute by saying something that — at the time — the community knows to be legally correct, whereas non-traditional couples must publicly state something that the community — at the time — knows to be legally incorrect.

23. Under the IRS view of these statutes “as applied”, same-sex couples have to undertake acts or statements making them appear foolish, uninformed or delusional in order for the IRS to concede that they have fully complied with the Texas “common-law marriage” statute for purposes of the federal marital deduction statute.

24. Treating the 2 groups materially different in this manner is unconstitutional discrimination which no compelling state interest justifies.

25. To avoid making the Texas “common-law marriage“ statute and the Estate Tax marital deduction statute unconstitutional “as applied” to the Estate, the words and actions of being “life partners” and a “committed couple” by Ms. Wood and Ms. Saum must be accepted as the equivalent of a traditional couples representation that they are “married”.

Prayer

WHEREFORE, plaintiff demands judgment against defendant as follows:

Respectfully submitted,

Richard M. Taylor III
745 E. Mulberry, Suite 460
San Antonio, Texas 78212
Phone: (210) 736-2230
Fax: (210) 817-3839
E-mail: rtaylorlaw@satx.rr.com 
State Bar No. 19720800
ATTORNEY FOR PLAINTIFF