Although the decision of the United States Supreme Court in United States v. Windsor invalidating much of the Defense of Marriage Act (DOMA) affects at most approximately 20% of the population of the United States, it has changed the operation of more tax provisions than the major tax acts since 1969. It may be apocryphal, but it is said that approximately 1,100 tax provisions depend to some extent on a determination of whether a taxpayer is married. The effect can be analogized to the major tax acts of 1976, 1986 and 2001. Unlike legislation which is generally not retroactive and has fixed effective dates, court decisions tend to be retroactive.
This tax update focuses solely on federal tax issues, although there are many other important issues which will arise after Windsor. While many state tax issues will be resolved consistently with the federal result, there will be significant differences, particularly in states which do not recognize same-sex marriages. The threshold question is: What does it mean to be married for tax purposes? The IRS takes the view that marriage is determined by applicable state law. In Revenue Ruling 58-66 (which deals with a taxpayer married under common law who moved to a state which required a marriage ceremony), the IRS ruled that the applicable state law was the law of the state where the marriage was entered into regardless of whether the spouses move to a state where their marriage would not be permitted or recognized. Much has been said about the uncertain status of same-sex spouses who were legally married in states allowing same-sex marriages and then move to a state which does not permit such marriages.
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