Internal Revenue Service Rules on Tax Treatment of Same-Sex Couples
Author: David W. Herbst
Following the United States Supreme Court’s recent decision recognizing same-sex marriages [United States v. Windsor, 570 U.S. __, 133 S.Ct. 2675 (2013)], on August 29, 2013, the Internal Revenue Service issued Revenue Ruling 2013-17 and two sets of FAQs addressing the taxation of same-sex couples. The Ruling applies to all federal taxes, including income, gift and estate taxes, and applies to all federal tax provisions where marital status is a factor, including filing status, personal and dependency exemptions, availability of the standard deduction, IRA availability, qualification requirements for pension plans (including joint and survivor annuity requirements) and other employee benefits and the taxation of those benefits.
Revenue Ruling 2013-17 first determines that the terms “husband” and “wife,” when used in the Internal Revenue Code, are to be interpreted in a gender neutral manner to apply to any persons legally married to each other under the laws of any state, the District of Columbia, a U.S. territory or a foreign country.
Relying upon the reasoning of a 1958 Revenue Ruling relating to tax treatment of common law marriages, recognized in some states but not others, Revenue Ruling 2013-17 goes on to reach the conclusion that for federal tax purposes, the validity of a same-sex marriage is to be determined under the law of the state (or other jurisdiction) in which the marriage was entered into, regardless of the couple’s place of domicile at the time of marriage, or thereafter. The federal tax status of a couple as married or not married does not change merely as a result of a change in their place of domicile.
Finally, the Ruling holds that domestic partnerships, civil unions and similar relationships under state law are not marriages and do not create spousal relationships for federal tax purposes.
Same-sex married couples must use either “married filing jointly” or “married filing separately” as their filing status on their 2013 federal tax returns. They may, but are not required to, file original or amended tax returns as married persons for 2012 or any prior year for which the statute of limitations is still open (for most taxpayers, 2010 or later).