On August 29, 2013, the Treasury Department and the IRS issued Revenue Ruling 2013-17 (“Rev. Rul. 2013-17”) and updated Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law (“FAQs”) to clarify and implement the federal tax consequences of United States v. Windsor.
As we explained in a previous Client Alert, Windsor overturned Section 3 of the Defense of Marriage Act (DOMA), which required the federal government to deny married same-sex couples the rights and benefits provided to married heterosexual couples. The U.S. Supreme Court held that the federal government must recognize same-sex marriages performed by states (and foreign jurisdictions). However, DOMA also provides states with the authority to refuse to recognize the marriages of same-sex couples from other states, and this portion remains in force. This left some confusion regarding whether the law of the state in which a married same-sex couple resides, or the law of the state or other jurisdiction in which that same-sex couple entered into marriage, would control the couple’s marriage status for federal tax purposes; Rev. Rul. 2013-17 answers this key question. Following the IRS’s approach with regard to common-law marriages, Rev. Rul. 2013-17 adopts the “state of celebration” approach for federal tax purposes,2 holding that a same-sex couple legally married in any state (or other jurisdiction) that recognizes same-sex marriages will be treated as married for all federal tax purposes, including for income, gift and estate tax purposes, even if the couple resides in a state (or other jurisdiction) that does not recognize same-sex marriages. The effective date of this ruling is September 16, 2013 (though same-sex spouses may claim retroactive tax relief for overwithheld income taxes).
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