In the wake of the United States Supreme Court’s ruling in United
States v. Windsor, the IRS recently announced changes in how it will process tax returns filed by or on behalf of married same-sex couples. In United States v. Windsor, the Supreme Court found the Defense of Marriage Act’s prohibition on the recognition of same-sex marriages legally entered into to be a violation of the United State Constitution. However, the ruling was limited to legally married same-sex couples living in states which recognized their marriage. The case declined to address the issue of legally married same-sex couples living in states which do not recognize their marriage, such as Arizona. For this reason, there has been speculation regarding how the IRS would process joint returns filed by legally married same-sex couples living in states, such as Arizona, that have Constitutional prohibitions against recognizing same-sex marriages.
In a sweeping announcement, the IRS has stated that it will now recognize all legal marriages, whether same-sex or opposite-sex, regardless of the residency of the taxpayer. However, the policy shift will not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under some state’s laws.
Based on this announcement, legally married same-sex couples will no longer be allowed to file tax returns electing single filing status. Legally married same-sex couples must file their 2013 federal income tax return using either the married filing jointly or married filing separately filing status. Additionally, same-sex couples who are legally married may, but are not required to, file original or amended returns electing to be treated as married for federal tax purposes for any previous tax year as long as the statute of limitations is still open on that year.
Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances, such as signing an agreement with the IRS to keep the statute of limitations open, that permit them to file refund claims for tax years 2009 and earlier.
Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.
The United States Treasury Department and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. The Treasury Department and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before Sept. 16, 2013, the effective date of the IRS’s announcement. If you have questions regarding a tax return that may be affected by this announcement, please contact the trusted tax attorneys of the Dana Law Firm