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DOMA – Same sex marriages will be recognized for IRS (federal) tax purposes

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The recent decision by the Supreme Court in the case of Windsor ruled that section 3 of the Defence of Marriage Act (DOMA) was unconstitutional, in effect requiring the recognition of same sex marriages for purposes of a number of federal laws. With respect to the Federal tax laws the Internal Revenue Service has released Revenue Ruling 2013-17.  This Ruling addresses the following three issues:

1. Whether, for Federal tax purposes, 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, and whether, for those same purposes, the term “marriage” includes such a marriage between individuals of the same sex.  

2. Whether, for Federal tax purposes, the Internal Revenue Service (Service) recognizes a marriage of same-sex individuals validly entered into in a state 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.

3. Whether, for Federal tax purposes, 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 laws of that state, and whether, for those same purposes, the term “marriage” includes such relationships. 

Holdings:

1. For Federal tax purposes, 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, and the term “marriage” includes such a marriage between individuals of the same sex. 

2. For Federal tax purposes, the Service adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages. 

3. For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar normal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships. 

In a key footnote the Ruling provides:  “For purposes of this ruling, the term “state” means any domestic or foreign jurisdiction having the legal authority to sanction marriages.

The filing as married must be taken for the tax year 2013. For prior open years the taxpayers have the option to file as married or single.

Thus, based on this ruling those in a same-sex marriage may begin filing their income tax returns as “married filing jointly”; and if they so desire (and assuming the statute of limitations has not expired), they may file amended returns to reflect their “married” status.

This may not be a universally “good” answer for those married to a non-resident alien. Generally, a couple may not file a “married filing jointly” return if one of the spouses is a non-resident alien. Further, the US taxpayer spouse must file as “married filing separately”. This filing status is generally less favourable than filing as an unmarried individual. However, with this ruling, the option to file as not married is no longer available.

The ruling is available at:
http://www.irs.gov/pub/irs-drop/rr-13-17.pdf

The Treasury Press release is available at:
http://www.treasury.gov/press-center/press-releases/Pages/jl2153.aspx

Frequently Asked Questions of Same-Sex marriages: is available at:
http://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for-Same-Sex-Married-Couples

Frequently Asked Questions on Civil Partnerships is available at:
http://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for-Registered-Domestic-Partners-and-Individuals-in-Civil-Unions

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