IRS Announces Tax Guidance for Same-Sex Marriages

Brian Wynne, CPA

The IRS has ruled that all legally married same-sex couples will be treated as married forirs_bdg federal tax purposes, regardless of where they currently reside. The ruling is the first official guidance from the IRS since theSupreme Court ruled on June 26 that section 3 of the Defense of Marriage Act was unconstitutional.

Details of IRS Ruling
Going forward, all same-sex married couples must file their 2013 tax returns using either the “married filing jointly” or “married filing separately” filing status. There will likely be some confusion for the 35 states that don’t recognize same-sex marriages, of which 24 use the federal return as a starting point in calculating their own state tax. Presumably those states will clarify their policies by the time the 2013 forms come out at the end of this year or the beginning of next year.

The IRS is allowing (but not mandating) same-sex couples to amend prior year returns to file as married. The statute of limitations should allow the 2010, 2011 and 2012 returns to be amended. More details are available at our tax blog.

Benefit Plan Considerations
A set of Frequently Asked Questions released by the IRS indicate that this guidance will apply to retirement plans effective September 16, 2013. The IRS has stated that it does intend to release additional information regarding the fact that same-sex married couples can file amended returns for prior tax periods, and how the retroactive aspect of this ruling may affect cafeteria plans and qualified retirement plans. Additionally, before September 16, 2013, the IRS will clarify requirements for plan amendments (including timing), as well as necessary corrections for plan operations.

Also forthcoming from the IRS and the Department of Treasury are streamlined procedures for employers who wish to file payroll tax refunds. You may file a refund for previously taxed health insurance and fringe benefits that were provided to same-sex spouses.

These rulings will significantly affect your plan structure and operations. Be alert for upcoming guidance from the IRS, the Treasury, and our analysis here on the blog.

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