Compliance Update: Recognition of same-sex marriages for federal tax purposes

Distributed September 5, 2013

Recognition of Same-sex Marriages for Federal Tax Purposes

As a follow-up to the overruling of the Defense of Marriage Act (DOMA), the Internal Revenue Service (IRS) recently released IR-2013-72, which announced the U.S. Department of Treasury and IRS will recognize same-sex marriages and treat the couples as married for federal tax purposes. Revenue Ruling 2013-17 applies regardless of whether the couple lives where same-sex marriages may or may not be recognized.

Key Points of the Ruling
Tax Treatment of Same-sex Spouses	For federal tax purposes, same-sex spouses are treated as married. Applies to income, gift, and estate taxes. Also applies to all federal tax provisions where marriage is a factor: Employee benefits Filing status Personal and dependency exemptions Taking standard deduction IRA contributions Claiming earned income tax credit or child tax credit
Legal Marriage	Same-sex couples must be legally married in: One of the 50 states District of Columbia U.S. territory Foreign country Ruling does not apply to couples in these relationships: Registered domestic partnership Civil unions Similar formal relationships recognized under state law
2013 Federal Income Tax Returns	Legally married same-sex couples generally must file jointly or married but filing separately.
Tax Years Open Under Statute of Limitations	Individuals who were in same-sex marriages may — but are not required to — file original or amended returns if they want to be treated as married for tax purposes for one or more prior tax years that are still open under the statute of limitations. Statute of limitations for filing a refund claim is generally (whichever is later): Three years from the date the return was filed; or Two years from the date the tax was paid. Refund claims may still be filed for tax years 2010, 2011, and 2012. Some individuals may have special circumstances (i.e., signing an agreement with the IRS to keep the statute of limitations open), which may permit taxpayers to file refund claims for tax years 2009 and earlier.
Health Insurance	If employees purchased same-sex spouse health insurance coverage from employers on an after-tax basis, those employees may treat the amount paid for coverage as pre-tax and exclude that cost from their income.

Upcoming Guidance

According to the Treasury and IRS, additional guidance will be forthcoming. Employers can expect guidance for filing refund claims for payroll taxes on previously taxed health insurance and fringe benefits provided to same-sex spouses. In addition, further guidance for cafeteria plans will be issued as well as how employers should treat qualified retirement plans and other tax-favored arrangements for same-sex spouses for periods prior to Revenue Ruling 2013-17. Other federal agencies may release similar guidance affected by the Internal Revenue Code.

Beginning September 16, 2013, the Treasury and IRS will apply the terms of Revenue Ruling 2013-17. Taxpayers wanting to rely on the Ruling’s terms may proceed, as long as the statute of limitations for the earlier period has not ended. Amended refund claim forms and filing instructions are available on the IRS website as well as helpful FAQs.

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