While the Supreme Court’s June 26 decision to repeal section 3 of the Defense of Marriage Act (DOMA), which defined marriage as between a man and a woman, was hailed by many as a step forward for gay rights activists, it has left a number of unanswered questions for both individuals and employers. The court’s 5-4 decision forced federal recognition of same-sex marriages where they are recognized by state law. However, we must wait for the Internal Revenue Service (IRS) to release its understanding of the impact of the court’s ruling.
When will this take effect
One of the areas not clearly defined in the court’s opinion is when this change takes effect. Based on the specific case of Windsor v. U.S., the Supreme Court determined that Windsor was entitled to an estate tax refund. This implies a retroactive ruling, but it will be up to the IRS to determine how this will be applied to other benefits, such as pre-tax deductions for spousal healthcare premiums.
Where will this take effect
Section 2 of DOMA allows states to refuse to recognize same-sex marriages performed under the laws of other states. This was not part of the case ruling from June 26. Therefore, the questions still remain as to how to handle couple who are legally married in one state but are living in a state that bans same-sex marriages. In areas like Portland, Oregon, where the nearby state of Washington recognizes same-sex marriage, this question is top of mind for couple who went north-of-the-border to legalize their relationship. Since Oregon only recognizes same-sex domestic partnerships, it is yet to be determined how to handle the tax implications for these couples who were legally married in Washington.
The Benefits Department at Xenium will continue to keep you informed as regulations and guidelines are published.
Sources:
- Reuters Checkpoint article: “Tax Implications of the Supreme Court’s Decision Holding DOMA Unconstitutional”
- U.S. Office of Personnel Management Benefits Administration Letter dated July 3, 2013
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