OctoberReport - page 9

October 2013 CBA REPORT
feature article
n June 26, 2013, the Supreme
Court ruled in
United States
v. Windsor
that Section 3 of
the Defense of Marriage Act (known as
DOMA) is unconstitutional as a depriva-
tion of the liberty of a person protected
by the Fifth Amendment to the United
States Constitution. The Court found
that under the Due Process Clause of the
Fifth Amendment, the federal govern-
ment cannot fail to recognize lawful
same-sex marriages for federal tax law
purposes and must look to state law to
determine whether an individual is a
spouse. The Court based its decision
in large part on the fact that Ms. Edith
(“Edie”) Windsor and her spouse, Thea
Spyer, resided in New York, a state that
recognizes same-sex marriages.
The Court’s decision created a state
of celebration for members of the gay, les-
bian, bi-sexual, and transgender (GLBT)
community. However, their excitement
was tempered by the fact that the direct
impact on the lives of same-sex mar-
ried couples living in states that did not
recognize their relationships remained
It was unclear after the ruling wheth-
er the Internal Revenue Service (IRS), as
well as other government agencies, would
determine a same-sex couple’s marital
status based on the laws of the state in
which they reside (“state of domicile”)
or on the laws of the state in which they
were married (“state of celebration”).
In other words, would federal benefits
extend to spouses married in a state
that recognizes same-sex marriage but
residing in a state that does not (e.g., a
same-sex couple married in Maryland,
but living in Ohio), or must spouses
currently reside in a state that recognizes
same-sex marriages (e.g., a same-sex
couple married in Massachusetts and
living in Maryland) in order to receive
federal benefits?
The fact that the Court did not invali-
date Section 2 of DOMA, which permits
states to deny recognition of same-sex
marriages that originated elsewhere,
added to the confusion.
Thankfully, after two months of an-
ticipation the IRS announced on August
29, 2013, in IR-2013-72 and Revenue Rul-
ing 2013-17, that same-sex couples that
were legally married in a state or foreign
jurisdiction that recognizes same-sex
marriages will be treated as married for
all federal tax purposes. The IRS speci-
fied that the ruling applies “regardless of
whether the couples lives in a jurisdic-
tion that recognizes same-sex marriage
or a jurisdiction that does not recognize
same-sex marriage.”
It should be noted that the IRS ruling
applies only to married same-sex couples
and does not apply to registered domestic
partnerships, civil unions, or any other
formal relationships recognized under
some states’ laws. The IRS ruling is effec-
tive prospectively beginning September
16, 2013, and further guidance from the
IRS applicable to the period of time prior
to September 16, 2013, is expected.
When explaining the IRS ruling,
Treasury Secretary Jack Lew stated that
it “provides certainty and clear, coherent
tax filing guidance for all legally married
same-sex spouses nationwide. It provides
access to benefits, responsibilities and
protections under federal tax law that
all Americans deserve.” Perhaps more
importantly, he stated that the ruling “as-
sures legally married same-sex couples
that they can move freely throughout the
country knowing that their federal filing
status will not change.”
Implications for Individuals
The IRS ruling means that married
same-sex couples, regardless of where
they live, will be treated as married
for all federal tax purposes, including
income, gift and estate taxes. It applies to
all federal tax provisions where marriage
is a factor, including filing status, per-
sonal and dependency exemptions, the
standard deduction, employee benefits,
IRA contributions and the earned in-
come or child tax credit. Legally married
same-sex couples must also file their 2013
federal income tax return using either
the married filing jointly or married fil-
ing separately filing status.
Individuals who were in same-sex
marriages may, but are not required to,
file original or amended returns choos-
ing to be treated as married for federal
tax purposes for one or more prior tax
years still open under the statute of
limitations. The statute of limitations for
filing a refund claim is generally the later
of (i) three years from the date the return
was filed, or (ii) two years from the date
the tax was paid. This means that refund
claims generally can still be filed for tax
years 2010, 2011 and 2012.
Implications for Employers
The IRS ruling provides tax certainty
and relief to employers in the area of
employee benefit administration because
By George W. Schein, Esq.
State of Celebration
The Supreme Court’s DOMA Decision and Subsequent IRS Guidance
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