All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes
Originally published on https://www.treasury.gov
Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples
WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.
The ruling implements federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.
“Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide. It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve,” said Secretary Jacob J. Lew. “This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”
Under the ruling, same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.
Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.
Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.
Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.
Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.
How to File a Claim for Refund
Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.
Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement.
For information on filing an amended return, go to Tax Topic 308, Amended Returns athttps://www.irs.gov/taxtopics/tc308.html or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.
Future Guidance
Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.
Other agencies may provide guidance on other federal programs that they administer that are affected by the Code.
For Revenue Ruling 2013-17, click here.
For Frequently Asked Questions, click here.
For registered domestic partners who live in community property states, click here for Publication 555, Community Property.
Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so (as long as the statute of limitations for the earlier period has not expired).
FMLA extended to same-sex couples
Originally published August 30, 2013 by Elisabeth Blattner-Thompson, Diane A. Thompson, Brian D. Pedrow and Mary Cate Gordon on https://ebn.benefitnews.com
The U.S. Department of Labor on Aug. 9 issued a revised fact sheet to provide guidance on Family and Medical Leave Act protections for same-sex couples. The guidance follows the U.S. Supreme Court’s decision in United States v. Windsor, which struck down Section 3 of the Defense of Marriage Act and fundamentally changed how the federal government treats same-sex marriages.
According to The Wall Street Journal, which quoted an internal memorandum from Labor Secretary Thomas Perez, the extension of FMLA coverage is but one of many steps that the agency will take to properly implement the Windsor decision. On the same day, the Social Security Administration announced that it will now process and pay out spousal retirement claims for same-sex spouses.
Under the revised DOL fact sheet, a "spouse" means a "husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including 'common law' marriage and same-sex marriage." This definition comports with the FMLA regulations, which define "spouse" based on the legal definition of marriage in the state of the employee's residence.
The DOL's FMLA "spouse" definition does not cover situations in which an employee in a same-sex marriage resides in a state that does not recognize same-sex marriage, but was married or works in a state that does recognize such marriages. If the DOL wishes to expand the "spouse" definition, it will be unable to do so through fact sheets or interpretive guidance, but instead must act through a public notice-and-comment rulemaking process.
The fact sheet contains links to earlier DOL regulatory materials, which refer to other FMLA leave benefits available to same-sex couples. For example, under a 2010 administrator's interpretation, an employee may take FMLA leave for a child being raised with a same-sex partner, regardless of whether the same-sex relationship is legally recognized, to bond with the new child or to care for a child with a serious health condition. In another example, an employee who was raised by same-sex parents may take leave to care for a non-adoptive or non-biological parent on the basis of an in loco parentis relationship. In both cases, the right to take leave arises from the in loco parentis relationship, not from the existence of a legally valid same-sex marriage.
Same-Sex Couples (still) Not “Married” for Federal Tax Purposes
by Robert A. Browning,
The Internal Revenue Service (IRS) has recently issued guidance, through answers to frequently asked questions (FAQs), clarifying how same-sex couples who are in state recognized domestic partnerships, civil unions, or marriages should file their federal income tax returns. These FAQs address a key provision of the Defense of Marriage Act (DOMA), which denies recognition of same-sex marriages or unions for purposes of administering federal law.
Even though the Obama administration has decided not to defend this key DOMA provision, and even though a number of federal courts (including two appellate courts) have held the provision to be unconstitutional, the IRS continues to maintain that same-sex couples do not qualify for the same tax benefits that are available to taxpayers who are married to someone of the opposite sex. This is true even if a same-sex couple is legally married under state law. This IRS position could have implications in a number of benefit-plan contexts.
Background
Section 3 of DOMA defines “marriage,” for purposes of administering federal laws, as a “legal union between one man and one woman as husband and wife.” It also defines “spouse” as “a person of the opposite sex who is a husband or wife.” Consequently, DOMA prohibits the federal government from recognizing same-sex marriages (or domestic partnerships or civil unions). This prohibition affects federal income taxes, Social Security benefits, and more than 1,000 other federal laws – including ERISA and the tax laws governing employee benefits.
A number of federal trial courts (now joined by two federal appellate courts) have ruled in favor of plaintiffs challenging this provision of DOMA in various tax-related contexts. In Massachusetts v. Health and Human Services, the First U.S. Court of Appeals upheld a lower court’s ruling that Section 3 of DOMA violates the U.S. Constitution. More recently, in Windsor v. U.S., the Second U.S. Court of Appeals upheld a trial court’s ruling that DOMA violates the Equal Protection Clause of the U.S. Constitution. In Windsor, the appellate court concluded that laws affecting homosexuals as a class are subject to heightened scrutiny, and when viewed in light of such scrutiny, the disparate treatment of same-sex spouses is not “substantially related” to an important government interest.
On February 23, 2011, Attorney General Eric Holder published a statement indicating that both he and President Obama had concluded that Section 3 of DOMA is unconstitutional. The Attorney General’s statement provided that the Department of Justice would no longer defend the constitutionality of DOMA’s Section 3 as applied to same-sex married couples in cases filed within the Second Circuit. However, the statement also noted that DOMA remains in effect until Congress repeals it or there is a final (i.e., Supreme Court) judicial decision striking it down. The statement concluded by noting that, although the Justice Department would not defend DOMA in court, the Executive Branch would continue to enforce the law.
The Obama administration has formally asked the Supreme Court to step in (as the 3 final arbiter of the constitutionality of the law), and many legal experts expect the Supreme Court to rule on DOMA’s constitutionality in the near future – possibly as early as the spring of 2013.
IRS Guidance
In its recent FAQs, the IRS continues to defer to DOMA on questions concerning same-sex couples’ federal income tax returns. In summary, the guidance provides that:
- Same-sex couples who are legally married for state-law purposes may not file a return using either the “married filing jointly” or “married filing separately” status;
- An individual may not file as a “head of household” based solely on his or her same-sex partner, regardless of whether the same-sex partner is the taxpayer’s dependent;
- If a child is a “qualifying child” (under Code Section 152(c)) of both parents who are same-sex partners, then either parent – but not both – may claim a dependency deduction for the child;
- If a same-sex couple adopts a child together, each partner may claim the adoption credit in an amount equal to the qualified adoption expenses paid or incurred by that partner, but the partners may not both claim a credit for the same expenses; and
- If an individual adopts the child of his or her same-sex partner, the individual may claim an adoption credit for the qualifying adoption expenses.
These FAQs confirm that, notwithstanding the President’s decision not to defend DOMA in court, and notwithstanding the fact that DOMA has now been held unconstitutional by two appellate courts, the IRS will continue to apply and enforce federal tax laws in accordance with DOMA’s Section 3.
Therefore, until there is action by either Congress or the Supreme Court, employers must (by way of example) continue to report the value of health insurance provided to an employee’s non-dependent, same-sex spouse or partner as additional taxable income to the employee, and they must continue to limit “spousal” rights under ERISA-covered plans to participants who are married to someone of the opposite sex.