By: Timothy P. Flynn

Yesterday, in the wake of the momentous SCOTUS decision in June striking down DOMA as unconstitutional, the all-powerful Internal Revenue Service formally announced recognition of same-sex marriages for all income, gift and estate tax purposes.  While same-sex couples must be legally married, they do not need to reside in a state that recognizes such marriages at the time of the tax filing.

In announcing the new IRS ruling, the Department of Treasury stated:

Under the ruling, same sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

The IRS also made clear, however, that same-sex unions, domestic partnerships, or other similar formal relationships will not be recognized for tax purposes.

One immediate benefit of the new policy is that legally married same-sex couples can seek tax refunds by filing amended returns for the years 2010, 2011, and 2012.  Additionally, empolyees who are in a legally recognized same-sex marriage that purchased spousal health insurance coverage from their employers can now exclude the insurance premiums from their taxable income.

The policy ruling certainly provides clarity on fiscal issues that have plagued same-sex marriages for decades. Treasury's press release provides coherent tax filing guidance for contributing tax payers that happen to be in same-sex marriages; now such couples can attain the benefits and protections to which every tax-paying citizen is entitled.

To date, 12 states recognize such marriages with several more that appear to be on the way.  While most state legislatures are getting around to addressing the issue of same-sex marriage, either through constitutional amendments banning such marriages, or through legislation recognizing them, New Mexico is addressing the issue through its judges on a county-by-county basis.  This will be the topic of the next Law Blogger post.

Refunds:
If you wish to apply for an income tax refund, use IRS Form 1040X Amended Individual Income Tax Return; refunds from estate or gift tax payments; use Form 843 Claim for Refund and Request for Abatement.  Good luck.

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