IRS Issues Guidance on Federal Tax Treatment of Married Same-Sex Couples

Related Attorney(s): David S. De JongMark W. SchweighoferDavid B. Torchinsky Eric J. Rollinger

Media Type: Alert

On August 29, 2013, the IRS issued Revenue Ruling 2013-17, which held that it would treat legally married same-sex couples the same as heterosexual married couples for all federal tax purposes, even if a lawfully married same-sex couple resides in a state that does not recognize their marriage. The Ruling eliminates uncertainty as to whether the government would apply the decision in U.S. v. Windsor, which held a portion of the 1996 Defense of Marriage Act (DOMA) to be unconstitutional on a “place of residence” basis or a “place of celebration” basis. It is now clear that “place of celebration” governs this question.

Specifically, the guidance states that, for all purposes under the Internal Revenue Code, the terms “spouse,” “husband and wife,” “husband” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, regardless of their place of residence. Thus, for example, a same-sex couple that was lawfully married in Maryland or D.C., but currently resides in Virginia (where same-sex marriages are not recognized), will nevertheless be treated as married for federal tax purposes. However, the Ruling makes clear that it is only applicable to same-sex couples that have entered into a union under state law which the state has termed “marriage”. As such, the ruling does not apply to individuals, whether same or opposite sex, who have entered into registered domestic partnerships, civil unions or other formal relationships recognized under state law that are not denominated as a marriage.

The holding of the ruling will be applied prospectively as of Sept. 16, 2013. However, the guidance states that it may be applied retroactively by taxpayers for the purpose of filing original returns, amended returns, adjusted returns or claims for credit or refund for any overpayment of tax resulting from these holdings, provided the applicable statute of limitations period has not expired (generally, the later of three years from the date of filing the return or two years from the date of payment). However, because amending a return to claim marital status may result in higher taxes, same-sex married couples should consult with a qualified tax professional prior to making a decision to amend any return or to otherwise proceed retroactively.

For more on the tax and estate planning implications of the Supreme Court’s decision in U.S. v. Windsor, please see our recent article: Supreme Court ruling on “DOMA” creates rights, responsibilities and uncertainties.

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