On April 28, 2015, the U.S. Supreme Court heard oral arguments in Obergefell v. Hodges, a case involving statewide bans on same-sex marriage in Kentucky, Michigan, Ohio and Tennessee. Although not a tax case, the Court's decision, expected this summer, could nonetheless affect same-sex spouses' taxes in a number of ways.
Tax Warrior Chronicles
The Department of Labor (DOL) has announced it will issue a Final Rule change to extend Family and Medical Leave Act (FMLA) benefits to all married same-sex couples effective March 27, 2015.
On Friday, January 16, 2015, the U.S. Supreme Court announced it will review an appellate court’s decision to uphold a ban on same-sex marriage. The court’s decision could bring gay marriage to 14 more states and may ultimately determine whether state bans on same-sex marriage are unconstitutional.
Earlier this year, the IRS issued guidance on the application of the Supreme Court's Windsor decision, which struck down section 3 of the Defense of Marriage Act (“DOMA”). An IRS ruling issued shortly after the Court's decision required qualified retirement plans to treat a same-sex spouse as a spouse for plan purposes as of September 16, 2013. However, that ruling didn't require plans to amend their terms to follow the Windsor decision. In April 2014 the IRS clarified that plan amendments are required by December 31, 2014, if a plan defines a marriage by reference to section 3 of DOMA or in a manner otherwise inconsistent with Windsor.
This time last year, Edie Windsor and same-sex couples across the country were celebrating a momentous win in their struggle for equality. While it was certain whichever way the Supreme Court decided in Windsor v. United States would be landmark, no one knew which way the court would rule, or most surprisingly, how fast change would take effect afterwards.
On May 20, 2014, United States District Judge John E. Jones, III, ruled Pennsylvania’s ban on same-sex marriage unconstitutional in Whitewood v. Wolf, holding that Pennsylvania’s mini-DOMA violates both the Due Process and Equal Protection clauses of the Fourteenth Amendment of the United States Constitution. Judge Jones’ ruling directs Pennsylvania to not only recognize out-of-state same-sex marriages, but also allows same-sex couples to wed within the state.
Since section 3 of DOMA was stricken down in June of this year, an onslaught of new tax decisions have been presented to same-sex couples. Businesses, too, have had to change some processes to accommodate the laws that now include previously unrecognized spouses. The Tax Warriors® at Drucker & Scaccetti have been at the forefront of this and other tax-related LGBT issues since well before it became the law of the land. To that end, we thought we’d share the IRS’s new frequently asked questions regarding the taxes of same-sex couples, including three questions regarding payroll taxes with respect to benefits provided by an employer for an employee's same-sex spouse.
The U.S. Department of Labor (DOL)'s Employee Benefits Security Administration (EBSA) has announced that it is following IRS in recognizing "spouses" and "marriages" based on the validity of the marriage in the state of celebration, rather than based on the married couple's state of domicile, for purposes of interpreting the meaning of "spouse" and "marriage" as these terms appear in the provisions of the Employee Retirement Income Security Act (ERISA) and the Code that EBSA interprets.
In its landmark Windsor decision, the Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA), which required same-sex spouses to be treated as unmarried for purposes of federal law, as an unconstitutional deprivation of equal protection. This decision carries significant tax consequences for same-sex married couples, but it also leaves a host of issues to be resolved by the IRS. Although the IRS hasn't yet issued its promised post-Windsor guidance, the Social Security Administration (SSA) has perhaps provided some clues about what to expect.