Marriage as Defined by the IRS - John R. Dundon II, Enrolled Agent
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Marriage as Defined by the IRS

Marriage as Defined by the IRS

Thinking about one’s marriage in IRS terms quickly can turn anybody into a stand up comedian.  In all seriousness though the times appear to be ripe for change in how the tax law defines marriage.  I write this because the Justice Department announced that it will no longer defend the constitutionality of section 3 of the Defense Of Marriage Act (DOMA) in two specific cases making their way through lower federal courts in the Second Circuit: Pedersen v. Office of Personnel Management, No. 10-CV-1750 (D. Conn.), and Windsor v. United States, No. 10-CV-8435 (S.D.N.Y.). Those two cases are among 11 cases challenging DOMA in federal courts. This announcement from the Justice Department signals in my humble opinion possible changes in tax law for same-sex spouses and suggests those changes may come sooner rather than later..

Currently the IRS takes the position that it is obliged to follow the Defense Of Marriage Act (DOMA) which essentially defines marriage as a legal union between a man and a woman and defines a spouse as a person of the opposite sex who is a husband or wife. (For prior coverage, see Doc 2004-12693 or 2004 TNT 118-4.). Because of this according to Amy Elliot the IRS currently doesn’t:

  1. Accept tax returns in which same-sex couples claim married filing jointly status.
  2. Allow the surviving spouse of a same-sex marriage to claim the section 2056(a) marital deduction, which shelters transfers from a decedent to a surviving spouse from possible imposition of the federal estate tax.
  3. Permit tax-favorable pension or medical plans to provide benefits to spouses of plan participants in same-sex marriages. Except in rare cases in which the partner is a dependent, the IRS includes the value of healthcare benefits for a same-sex spouse in an employee’s taxable income, thereby subjecting the payments to Social Security and Medicare tax withholding and increasing the tax burden on both affected employees and employers.
  4. Consider same-sex spouses to be spouses eligible to make contributions to healthcare flexible spending arrangements, which are not subject to income taxes, on behalf of eligible individuals.

None of that changed, yet.  But the results of the court cases mentioned above along with the Justice Department’s new position on defending DOMA should inevitably lead to some kind new horizon.