New Department of the Treasury and Internal Revenue Service Final Regulations Now Reflect Supreme Court’s Obergefell v. Hodges and Windsor v. United States Rulings
On September 2nd, the final regulations that reflect the holdings of the Supreme Court rulings that upheld same-sex marriage laws around the country as well as Revenue Ruling 2013-173 were released to the public. The new terms in the regulations reflect the new descriptions of marital status of taxpayers for federal tax purposes.
A Brief History Lesson
In 2013, the Supreme Court of the United States in the Windsor v. United States ruling held that the Defense of Marriage Act, which prohibited the federal government from recognizing same-sex marriage, is unconstitutional on the on the basis that it violates the principles of equal protection and due process. Similarly, in 2015, the Supreme Court in the Obergefell v. Hodges ruling held that state laws excluding same-sex couples from marriage based on the fact of the same-sex relationship are invalid. It further held that there is no lawful basis for any state to refuse to recognize a same-sex marriage performed in another state.
Based on these rulings the IRS and the Department of the Treasury made revisions to the Tax Code to reflect the rulings.
What Changed In Regards To Application Of Tax Laws
The final regulations dictate that the terms “spouse,” “husband” and “wife” mean any individual lawfully married to another individual. Similarly, the term “husband and wife” means two individuals lawfully married to each other. These terms may be applied regardless of the gender of the individuals being labeled by the terms. As confirmed by the IRS, the terms are intended to be gender neutral, with no specific reference in the regulations to same-sex marriage at all.
The final regulations also further clarify that a marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by the state, possession or territory of the United States in which the marriage is entered into, regardless of the married couple’s place of domicile. This has the legal effect of ensuring that a same-sex marriage is recognized federally in all states and territories even if the state in which the couple are residing in has not officially recognized the validity of same-sex marriages. In addition to this, for couples married in foreign jurisdictions, a marriage is recognized for federal tax purposes if that marriage would be recognized in at least one state, possession or territory of the United States. This serves a similar purpose of allowing same-sex couples who marry outside of the country to be recognized as legal spouses by the federal government even if the state that they may be eventually domiciled in does not.
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