In the wake of the U.S. Supreme Court’s decision to strike down part of the Defense of Marriage Act (“DOMA”), federal agencies are starting to respond with new policies and procedures.
The 5 to 4 opinion in U.S. v. Windsor held that Section 3 of DOMA, defining marriage as the union of one man and one woman, was unconstitutional. Now, roughly three months later, agencies are taking steps to comply with the ruling.
The Treasury Department and Internal Revenue Service released Ruling 2013-17, declaring that the IRS will look to the state of celebration to determine if a couple is validly married for all federal tax-related purposes. The ruling applies with equal measure to all federal tax considerations from income to gift and estate taxes, to personal and dependency exemptions, employee benefits and IRA contributions.
In addition, the ruling has retroactive effect. The three-year statute of limitations for filing a federal tax refund claim gives same-sex couples the chance for a “do-over” for tax years 2010, 2011 and 2012.
Employers are implicated by the ruling, which requires that as of September 16, all qualified employee benefit plans must treat same-sex spouses the same as opposite-sex spouses for all qualified plan purposes – such as survivor benefits, for example, regardless of whether the state itself recognizes same-sex marriage.
In addition to the IRS, several other federal agencies have taken steps to comply with the decision. Attorney General Eric Holder Jr. sent a letter to the Speaker of the House on September 4 stating that at the direction of President Obama, the Department of Justice will no longer enforce 38 U.S.C. Sections 101(3) and 101(31). The provisions covered veterans’ benefits and defined “spouse” as a “person of the opposite sex.” Same-sex spouses of veterans and some active duty or reserve members will now be eligible for benefits such as home loans and healthcare.
In August the Department of Labor issued an internal memorandum to update various documents, removing references to DOMA and making clear that spousal leave under the Family and Medical Leave Act is available to same-sex spouses in states that recognize same-sex marriage. Specifically, the definition of “spouse” in Fact Sheet #28F was updated to include “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including . . . same-sex marriage.” Secretary Thomas Perez indicated to DOL staff members that the changes are “one of many steps the Department will be taking over the coming months” to implement the Windsor decision.
The Department of Defense followed suit, announcing that same-sex spouses of uniformed service members and DOD civilian employees will now be included in coverage as of September 3. As long as service members provide a valid marriage certificate, the DOD said benefits such as healthcare, housing allowance, and family separation allowance will be available as of the date of marriage or retroactive to June 26, the date of the Windsor decision. In addition, the Department said it intends to implement a policy allowing military personnel in a same-sex relationship to take non-chargeable leave for the purpose of travelling to a jurisdiction where a valid same-sex marriage can occur.
“This will provide accelerated access to the full range of benefits offered to married military couples throughout the department, and help level the playing field between opposite-sex and same-sex couples seeking to be married,” the Department announced.
To read the IRS ruling, click here.
To read the DOL’s updated Fact Sheet #28F, click here.
To read the DOD’s announcement, click here.
Why it matters: The changes adopted by various federal agencies are a clear victory for same-sex married couples, who will now be eligible for a broad range of federal benefits. For employers located in states that recognize same-sex marriage – i.e., California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington and Washington, D.C. – minor adjustments may be necessary. Employers located in the 37 other states should get busy to comply with the guidance and deadlines set by the IRS and the DOL and be prepared to make more changes as the agencies continue to update their policies.