On June 26, 2013, the U.S. Supreme Court ruled that Section
3 of the Defense of Marriage Act (DOMA) is unconstitutional because it violates
the principles of equal protection (Windsor, U.S. Supreme Court, June 26,
2013). The IRS has now issued guidance on the effect of the Windsor decision
and how the IRS interprets the sections of the Internal Revenue Code that refer
to a taxpayer’s marital status. Specifically, Revenue Ruling 2013-17 deals with
the following issues for federal tax purposes as a result of the Windsor
decision:
• Whether
the terms “spouse,” “husband and wife,” “husband,” and “wife” include an
• Whether
the IRS recognizes a marriage of same-sex individuals validly entered into in a
state (or other jurisdiction) whose laws authorize the marriage of two
individuals of the same sex even if the state in which they are domiciled does
not recognize the validity of same-sex marriages.
• Whether
the terms “spouse,” “husband and wife,” “husband,” and “wife” include
individuals (whether of the opposite sex or same sex) who have entered into a
registered domestic partnership, civil union, or other similar formal
relationship recognized under state law that is not denominated as a marriage
under the laws of that state, and whether the term “marriage” includes such
relationships.
Recognition of Same-Sex Marriages
There are more than 200 provisions in the Internal Revenue
Code and Regulations that include the terms “spouse,” “marriage,” “husband and
wife,” “husband,” and “wife.” The IRS Revenue Ruling states that such terms
also apply to individuals lawfully married under state law (or other
jurisdiction) to a person of the same sex, and to legal marriages under state
law (or other jurisdiction) between individuals of the same sex. It does not
matter if a term is gender-neutral or gender specific because the ruling in Windsor said any federal
law that confers marriage benefits and burdens only on opposite-sex married
couples is unconstitutional.
Marital Status Based on the Laws of the State Where a Marriage Is Initially Established
For federal tax purposes, the IRS Revenue Ruling states
that individuals of the same sex are lawfully married under the Internal
Revenue Code as long as they were married in a state (or other jurisdiction)
whose laws authorize the marriage of two individuals of the same sex, even if
they are domiciled in a state that does not recognize the validity of same-sex
marriages.
Registered Domestic Partnerships, Civil Unions, or Other Similar Formal Relationships Not Denominated as Marriage
For federal tax
purposes, the IRS Revenue Ruling says the term marriage does not include
registered domestic partnerships, civil unions, or other similar formal
relationships recognized under state law that are not denominated as a marriage
under that state’s law, and the terms “spouse,” “husband and wife,” “husband,”
and “wife” do not include individuals who have entered into such a formal
relationship.
This applies regardless of whether individuals who have entered
into such relationships are of the opposite sex or the same sex.
Effective Date
The IRS Revenue
Ruling is effective September 16, 2013. However, affected taxpayers may also
rely on this Revenue Ruling for the purpose of filing original returns, amended
returns, adjusted returns, or claims for credit or refund for any overpayment
of tax resulting from this Revenue Ruling, provided the applicable statute of
limitations period has not expired. If such a return is filed based on this
Revenue Ruling, all items required to be reported on the return or claim that
are affected by the marital status of the taxpayer must be adjusted to be
consistent with the marital status reported on the return or claim.
Taxpayers may also
rely on this Revenue Ruling retroactively with respect to any employee benefit
plans and arrangements for purposes of employer-provided health coverage
benefits or other fringe benefits that were provided by the employer and are excludable
from income under the Internal Revenue Code based on an individual’s marital
status.
For example, if
employees could elect to make pre-tax salary-reductions for health coverage
under an IRC section 125 cafeteria plan, and the employer also elected to
provide health coverage for a same-sex spouse on an after-tax basis under a
group health plan sponsored by that employer, the affected taxpayer may treat
the amounts that were paid by the employee for the coverage of the same-sex
spouse on an after-tax basis as pretax salary reduction amounts.
There is nothing in
the Revenue Ruling that requires an affected taxpayer to amend a previously
filed return to pay additional taxes such as a marriage penalty. The election
to file amended returns only applies to overpayments of tax. There is also
nothing in the Revenue Ruling that says it is optional for a legally married
same sex couple to be treated as married for federal tax purposes. Thus, if a
married same-sex couple is subject to a marriage penalty as a result of their
legal marriage, they do not have the option to file as if they were not
married.