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IRS Rules All Legal Same-Sex Marriages Will Be Recognized for Federal Tax Purposes

  • August 30, 2013

The Internal Revenue Service has ruled that same-sex couples who are legally married in jurisdictions that recognize their marriages will be treated as married for all federal tax purposes, regardless of whether the couple currently lives in a jurisdiction that recognizes same-sex marriage or not. IRS Revenue Ruling 2013-17 follows the U.S. Supreme Court’s June 26, 2013, opinion in United States v. Windsor, which invalidated the provision of the federal law that confined marriage to a legal union between one man and one woman as husband and wife. (For details on Windsor, please see U.S. Supreme Court Rulings on DOMA and California's Proposition 8 Affect Employee Benefit Plans and Plan Sponsors.) 

The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, providing employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

The ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law. 

The ruling provides that by September 16, 2013, employers must take the following prospective actions: 

  1. Recognize same sex spouses for payroll tax purposes, including with respect to the taxation of employer-provided group health coverage and other fringe benefits, and 
  2. Implement the ruling with respect to qualified retirement plan spousal protections and benefits, including treating a same-sex spouse as a spouse for payment of death benefits and qualified joint and survivor annuity requirements.

The IRS stated that it will be issuing further guidance on the retroactive application of Windsor to benefits and retirement plans, and on plan amendment requirements (including timing of required amendments). The ruling and the related FAQs also note procedures that individuals can follow for filing refund claims for prior open tax years. The ruling does not address whether employers will be required to take any retroactive actions for tax and benefit treatment of same-sex marriages prior to September 16, 2013.

Jackson Lewis will continue to provide further analysis and updates on issues and guidance following Windsor

IRS Circular 230 disclosure: Any tax advice contained in this communication (including any attachments or enclosures) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.  (The foregoing disclaimer has been affixed pursuant to U.S. Treasury regulations governing tax practitioners.)

 

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