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Treasury and IRS Release Guidance on Same-Sex Marriage, Domestic Partnerships, and Civil Unions

Treasury and IRS Release Guidance on Same-Sex Marriage, Domestic Partnerships, and Civil Unions


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On August 29, 2013, the Treasury Department and Internal Revenue Service (IRS) released Revenue Ruling 2013-17 and related frequently asked questions (FAQs) on the topic of same-sex marriage, domestic partnerships, and civil unions and how these relationships will be treated under federal tax law. The much-awaited guidance was in response to the June 2013 Supreme Court United States v. Windsor ruling. In Windsor, the Supreme Court struck down a key section of the federal Defense of Marriage Act (DOMA) that defined marriage as the union of one man and one woman for purposes of federal law. However, the extent of the impact of Windsor on same-sex spouses in the context of federal tax law was unclear until today. Under today's guidance, the Treasury and IRS have announced that all legal same-sex marriages will be recognized for federal tax purposes.

The guidance highlights a number of key considerations. From an employee benefit perspective, the following points are of interest:

  • For federal tax purposes, the IRS will look to the state or foreign law of the jurisdiction where the marriage celebration occurred to determine whether individuals are married. This means that if a same-sex couple is married in a state that recognizes same-sex marriage and moves to a state that does not recognize same-sex marriage, then he or she will still be considered married for federal tax purposes.
  • The guidance is effective as of September 16, 2013; however, it provides that in certain events taxpayers can rely on its terms prior to that date as long as the statute of limitations for a period has not expired. Examples provided include: 
  •  An employee who has been subject to taxation on the value of his or her employer-sponsored group health plan coverage will be eligible to file an amended IRS Form 1040 to reflect the employee's status as a married individual and recover federal income tax paid for open tax years (generally three years). The same relief applies to an employee who was unable to pay for premiums on a before-tax basis through a cafeteria plan.
  •  An employer may claim a refund for Social Security taxes and Medicare taxes paid on such benefits--again, within the period of limitations for filing a claim.
  • The Treasury intends to issue additional guidance around how retirement plans and other tax-favored arrangements should treat same-sex spouses for periods prior to the effective date.
  • This new recognition of same-sex marriages for federal tax purposes does not apply to domestic partnerships or civil unions. For example, an employee who covers a domestic partner who is not a same-sex spouse will continue to be subject to imputed income if covered by a group health plan unless he or she meets the definition of a dependent for group health plan purposes under the Internal Revenue Code. While a clarification, this is not a change in the law.

A number of additional technical clarifications are provided in the guidance.

Please note that the following links on the IRS website seem to be undergoing changes and we cannot be certain that they will be operational when you click on them.

The Treasury news release is available here.

The IRS news release is available here.

Revenue Ruling 2013-17 is available here.

The FAQs titled "Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law" are available here.

The FAQs titled "Answers to Frequently Asked Questions for Registered Domestic Partners and Individuals in Civil Unions" are available here.

Aon Hewitt will be providing a more detailed report on this important guidance and its impact on employer-provided benefits in the near future.