Lawyer sues IRS to recognize pets as dependents

A lawyer has sued the Internal Revenue Service to recognize pets as legal dependents on taxes.

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Amanda Reynolds, an attorney licensed in New York and Utah, filed a complaint in the Eastern District of New York with Finnegan Mary Reyonlds — her eight-year-old golden retriever — asking the court to determine whether pets can be recognized as non-humans dependents, Forbes reported.

Reynolds says that Finnegan is entirely dependent on her for food, shelter, medical care, training, transportation and daily living. With no independent income, annual expenses over $5,000 and residing exclusively with her, Reynolds argues her dog satisfies every meaningful element of dependency under section 152 of the Tax Code, except, that is, for being human.

While dogs are legally classified property, Reynolds says Finnegan’s care responsibilities mirror, and sometimes surpass, those of human dependents. However, Reynolds acknowledges that the Tax Code doesn’t allow relief for taxpayers who financially support their companion animals, unlike the various credits and deductions for human dependents, like the Child Tax Credit, Dependent Care Credit and Earned Income Tax Credit.  

Reynolds claims this is an arbitrary and unfair tax burden that lacks rational basis, especially considering the IRS’s recognition that some animals, like service dogs, may qualify for tax advantages. She argues that, financially speaking, there is no real difference between companion and service animals.  

She also argues that treating similarly-situated taxpayers differently based on whether their dependents are human is discrimination, violating the Equal Protection Clause of the Fourteenth Amendment, and that denying a tax break for pets constitutes a wrongful taking, violating the Takings Clause of the Fifth Amendment. She concludes that this justifies recognizing dogs as “quasi-citizens entitled to limited civil recognition, including dependency status for tax purposes.”

The court does not seem inclined to take up the matter, Forbes reported. Magistrate Judge James Wicks granted a motion to stay discovery pending the IRS’s anticipated motion to dismiss — meaning, Wicks issued a formal request to pause the discovery process in a lawsuit, with the goal to avoid unnecessary costs and effort while the court decides whether a case can or should move forward. 

Reynold’s claim has lack of standing, namely in that she does not allege that she actually attempted to claim her dog as a dependent or suffered an actual injury. Wicks found other issues with the complaint, including the Anti-Injunction Act and the Declaratory Judgement Act that generally bar challenges to tax assessments and collections. The IRS also claims improper service, arguing that the formal delivery process of legal documents did not occur.

Finally, Reynold’s case lacks constitutional claims. Wicks noted that the Fourteenth Amendment does not apply to federal agencies and that the Fifth Amendment takings claim is unlikely to succeed. He also noted that the laws and tax court precedent makes clear that animals do not qualify as dependents under the Tax Code.