The Internal
Revenue Service (IRS) has issued a new Revenue Ruling 2013-17 addressing the status of individuals
of the same-sex who are lawfully married under the laws of a state that
recognizes such marriages. It states
that individuals of the same sex will be considered to be lawfully married under
the Internal Revenue Code as long as they were married in a state whose laws
authorize the marriage of two individuals of the same sex, even if they are
domiciled in a state that does not recognize the validity of same-sex
marriages. The terms of Revenue Ruling
2013-17 will start being applied on September 16, 2013, but taxpayers can file refund
claims for prior open years even before that date.
The IRS has
also released on-line “Answers to Frequently Asked
Questions for Individuals of the Same Sex Who Are Married Under State Law,” which specifically addresses the
rules that qualified retirement plans are required to comply with, along with
some examples of the consequences of these rules for qualified plans. It is well to note, however, that while taxpayers
can file amended returns that relate to prior periods in reliance on the new
rules, the IRS has not yet provided guidance regarding the application of Windsor
and these new rules to qualified retirement plans for periods before that date.
The new Revenue
Ruling reflects the recent U.S. Supreme Court decision in United States v.
Windsor (June 26, 2013), invalidating a key provision of the 1996 Defense
of Marriage Act (DOMA) and implements the Federal tax aspects of this
decision. Under the new ruling, same sex
couples will be treated as married for all Federal tax purposes, including
income and gift and estate taxes. Interestingly,
however, the ruling does not apply to registered domestic partnerships, civil
unions, or similar formal relationships recognized under state law.
The Treasury
and the IRS said they intend to issue streamlined procedures for employers who
wish to file refund claims for payroll taxes paid on previously-taxed health
insurance and fringe benefits provided to same-sex spouses. They also plan on
issuing further guidance on cafeteria plans and on how qualified retirement
plans and other tax-favored arrangements should treat same-sex spouses for
periods before the effective date of this Revenue Ruling.
