Virginia Recognizes Sam-Sex Marriages for Tax Purposes

Posting by Brian Wynne

Last year, The Supreme Court ruled in United States v. Windsor that same-sex married couples could be treated as married under federal law.  This had broad implications for US federal taxes for same-sex married couples, but at the state level the laws continued to vary state by state.  When the IRS issued its guidance, they clarified that for tax purposes the IRS would recognize any marriage entered into legally in a state that allowed the marriage, regardless of current residence.

In states like Maryland or the District of Columbia, which allowed same-sex marriages to be performed in the state and also recognized same-sex marriages entered into legally in other states, the federal tax law and state tax law were now in parity.  States that had not yet recognized same-sex marriage, however, like Virginia, were left to their own to determine how to treat same-sex couples residing in their state, even if they were legally married elsewhere.  Virginia initially ruled that it would not recognize the marriages, and couples would have to file separate state tax returns, even if they filed a joint federal tax return.
On October 6, 2014, the US Supreme Court declined to weigh in on a case (Bostic v. Schaefer) challenging Virginia’s ban on same-sex marriage.  The US District Court and Circuit Court of Appeals had both ruled the ban unconstitutional, and when the Supreme Court refused to hear the case, the decisions that held the ban on same-sex marriage unconstitutional were upheld.

As a result, a day later the Virginia Department of Taxation issued Tax Bulletin 14-7 clarifying that Virginia would now recognize, for state income tax purposes, a same-sex marriage that is recognized for federal income tax purposes.  Similar to the IRS guidance, a same-sex married couple who filed a joint federal tax return can choose to (but is not required to) amend previously filed returns within the three-year statute of limitations.

The state income tax landscape continues to evolve quickly on this issue, but for now Maryland, DC and Virginia (among other states) are all in agreement with the federal tax treatment of same-sex marriage.  If you have any questions, please contact us or consult with your tax advisor.  Stay tuned for more updates as this issue evolves.

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