In a swift and decisive ruling, the IRS concluded that same-sex couples lawfully married in the state of celebration are married for federal tax purposes regardless of residence. Rev Rul 2013–17. The ruling effectively extends same-sex marriage to couples nationwide.
Here’s how the ruling works: in states that permit nonresidents to marry, including recognition states such as Maryland, New Hampshire, Vermont, and Washington, couples from states that don’t recognize same-sex marriage can come and get married, go home, and are then married for federal tax purposes (although Vermont does have a residency requirement for divorce).
This is what happened in Obergefell v Kasich (SD Ohio, July 22, 2013) 2103 US Dist Lexis 102077. Same-sex Ohio residents flew to Maryland, got married in the plane on the tarmac, and then flew home. A federal court held that they were married under state law, because Ohio generally recognizes foreign state marriages. Interestingly, the IRS ruling implies that they would be still married for federal tax purposes even if they weren’t married for state law purposes in Ohio.
The IRS ruling did not directly address the surviving spouse in the U.S. Supreme Court decision in Windsor because she was married in Canada, although the IRS has since made clear that the ruling also applies to same-sex spouses married in a foreign jurisdiction. The Windsor decision emphasized that the marriage was recognized by the state of New York, her state of residence. In Cozen O’Connor, P.C. v Tobits (ED Pa, July 29, 2013) 2013 US Dist Lexis 105507, the district court concluded that a same-sex surviving spouse was married for federal employment law purposes because her Canadian marriage was recognized by the state of Illinois, even though she couldn’t be married there.
With little analysis, the IRS ruling also concludes that the term “marriage” doesn’t include registered domestic partners and civil unions or other formal similar relationships that aren’t denominated as a marriage under state law. In the past, the IRS had given advice that opposite-sex couples in Illinois civil unions could file joint returns because they were treated as spouses under state law. Not anymore. The same applies to California registered domestic partners.
Here’s the bottom line: if you want the federal benefits of being married, you have to get married. At least in California, you won’t have to leave the state.
For continuing coverage of tax issues for same-sex spouses and registered domestic partners, turn to CEB’s Estate Planning & California Probate Reporter.
Related CEB blog posts:
- Going to the Chapel or Staying Alive: Marital Deduction for Registered Domestic Partners after Windsor
- Whither Windsor: What to Do About the Estate Tax Marital Deduction While the Court Considers DOMA
- Second Bite at the Apple: How Unregistered Domestic Partners (and Other Cotenants) Can Still Avoid Property Tax Reassessment
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