Department Of Treasury And Internal Revenue Service Announce They Will Recognize Legal Same-Sex Marriages For Federal Tax Purposes Regardless Of State Of Domicile


In June 2013, the US Supreme Court in Windsor v. U.S., ruled as unconstitutional the portion of the federal Defense of Marriage Act (“DOMA”) which provided that for federal law purposes, a marriage meant an opposite-sex marriage only. See Dickinson Wright’s July 1, 2013 Client Alert on the Windsor decision and it implications. Ever since then, employers sponsoring employee benefit programs and employees in legal same-sex marriages have been waiting for the various federal agencies, and in particular, the Internal Revenue Service, to issue guidance on how they would treat same-sex marriages. This guidance is important since state laws vary greatly on recognition of same-sex marriages, with 13 states and the District of Columbia permitting same-sex marriages, some states (e.g., New Jersey) recognizing civil unions and domestic partnerships as substantially equal to marriage, some states granting some legal rights to same-sex couples (e.g., Wisconsin) and some states prohibiting same-sex marriages and refusing to grant them any marriage-like rights (e.g., Arizona, Michigan, Tennessee).

Department of Treasury and IRS Ruling -

On August 29, 2013, in Revenue Ruling 2013-17, the Department of Treasury and Internal Revenue Service announced that for all federal tax purposes, same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married. The ruling applies regardless of whether the couple resides in a jurisdiction that recognizes same-sex marriage or not. According to the Department, this ruling will provide certainty, clarity and coherence for same-sex couples nationwide, it will allow same-sex couples the ability to move throughout the country knowing their federal tax status will not change and it will promote uniformity, stability and efficiency in the application and administration of the tax code, including for employee benefit plan purposes. Among other things, the ruling applies to federal income and gift and estate tax and in particular, to employee benefit plans.

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