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April 23, 2014

IRS To Recognize All Legal Same-Sex Marriages for US Federal Tax Purposes

On August 29, 2013, the US Internal Revenue Service (“IRS”) and the US Department of Treasury released announcements confirming that in light of the historic US v. Windsor ruling from June 26, 2013, the IRS will recognize all legal same-sex marriages performed in one of the 50 states, the District of Columbia, a US territory, or a foreign nation. 

There was uncertainty in the wake of the US v. Windsor ruling, which struck down the unequal treatment of same-sex spouses by the federal government in states that recognize same-sex marriage. It remained silent on whether such equal treatment must be extended to legally married same-sex couples residing in states that do not recognize same-sex marriage. The question was raised whether the IRS would judge the validity of a same-sex marriage based on the place of marriage or the domicile of the couple.

In its Revised Rule 2013-17, the IRS states that it will rely on the location of the marriage to determine valid tax status as a married couple. This is consistent with over 50 years of practice by the IRS of recognizing marriages based on the laws of the jurisdiction where the marriage occurred. For example, the IRS has long recognized common-law marriages of individuals that entered into such a marriage in a jurisdiction that recognized common-law marriages, even if the couple subsequently moved to a jurisdiction in which common-law marriages were not recognized.

The IRS has further clarified that all language referring to spouses, husbands and wives in the Internal Revenue Code (“IRC”) will be considered gender neutral. All rights and rules extended to heterosexual spouses under the IRC will now be extended to same-sex spouses, regardless of the actual terminology used in the IRC.

A key result of this clarification is that no matter where they live all legally married same-sex couples filing their US federal income tax returns must now file as either married filing jointly, or married filing separately, starting with their 2013 income tax filings. Amended federal income tax returns will be accepted for as far back as the 2010 income tax filing.

Same-sex spouses on both sides of the border should also review their US tax and estate planning to ensure that they are taking full advantage of the marital deductions and credits now extended to them by the US federal government.

The IRS is not the first department of the US government to extend rights to same-sex spouses after the US v. Windsor decision. Shortly after the ruling, the US Customs and Immigration Services extended full recognition to the marriages of legally married same-sex couples, and began issuing green cards to same-sex spouses right away.

Altro Levy LLP Copyright 2014

About the Author

Melissa V. La Venia, Tax Attorney, Altro Levy Law Firm
Legal Professional

Melissa attended Boston University School of Law and is a member of the New York state bar. She has a B.A. in Economics from the University of Delaware. She worked as an associate at Kaye Scholer LLP in New York and as the director of legal affairs at Groupe Lagassé in Sherbrooke, QC prior to joining Altro Levy. As an American currently residing in Canada, Melissa is able to truly identify with the unique cross-border needs of our clients

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