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.