The Internal Revenue Service issued Revenue Ruling 2013-17 answering some, but not all, questions for employers in the wake of the US Supreme Court’s opinion that invalidated the federal law that confined marriage to a legal union between one man and one woman as husband and wife – United States v. Windsor, No. 12-307 (June 26, 2013) (see our earlier blog post regarding this decision).
The IRS ruled that same-sex couples, who are legally married in jurisdictions that recognize their marriages, will be treated as married for all federal tax purposes regardless of whether the couple currently lives in a jurisdiction that recognizes same-sex or in a jurisdiction that does not recognize same-sex marriage.
The ruling applies to all federal tax provisions where marriage is a factor, including tax filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.
The ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.
The ruling provides that by September 16, 2013 employers must take the following prospective actions: (1) recognize same sex spouses for payroll tax purposes, including with respect to the taxation of employer-provided group health coverage and other fringe benefits, and (2) implement the ruling with respect to qualified retirement plan spousal protections and benefits, including treating a same-sex spouse as a spouse for payment of death benefits and qualified joint and survivor annuity requirements.
The IRS stated that it will be issuing further guidance on the retroactive application of Windsor to benefits and retirement plans, and on plan amendment requirements (including timing of required amendments). The ruling and related FAQs issued simultaneously also mention procedures that individuals can follow claim refunds for prior open tax years. The ruling does not discuss whether employers will be required to take any retroactive actions for tax and benefit treatment of same-sex marriages prior to September 16, 2013.