Does an Employer Have to Provide Benefits for an Employee’s Domestic Partner If the Employee Is in a Same-Sex Union?

An Employee Benefits FAQ with Joshua A. Diveley.

In 2013, there was a Supreme Court case named Windsor in which the Supreme Court said that for federal law purposes, the term “spouse” must include a same-sex spouse. The Department of Labor and IRS recently came out and said that to determine whether someone is a same-sex spouse covered by that law, you look at the state of celebration of the marriage. So, with one exception, that is going to apply for all federal benefits–benefits covered by federal law.

The exception is FMLA, which says that the state of residency is what determines whether it is a marriage or not. For example in Nebraska, if an individual lived there then the state of residency would say that we don’t recognize same-sex marriage, but if somebody from Nebraska went to Iowa and was married, the state of celebration, Iowa, would say that the same sex marriage would be valid. So in that case, that would be the one exception where for FMLA purposes, the Nebraska resident would not be covered.

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IRS Issues Same-Sex Marriage Guidance

The IRS recently issued Rev. Rul. 2013-17 providing guidance on how the Windsor ruling (finding Section 3 of DOMA unconstitutional) affects tax issues related to same-sex marriage.

First, the IRS announced it will determine marital status based on the laws of the state or country of celebration of the marriage, not the state of residence of the affected persons. Therefore, same-sex individuals who marry in Iowa (or any other state that recognizes same-sex marriages) and live in Nebraska (or any other state that does not recognize same-sex marriages) will be considered married for federal tax law purposes.

Second, the IRS analyzed the use of the terms “husband”, “wife” and “husband and wife” in the Internal Revenue Code (Code) and indicated that it interprets those terms as gender-neutral. This interpretation permits same-sex couples to be, individually and collectively, “husband”, “wife” and “husband and wife”. The IRS will legally recognize same-sex married individuals as spouses, husbands and wives wherever those terms exist in the Code.

Third, the IRS determined that domestic arrangements not legally identified as marriage under state law will not be a marriage for purposes of the IRC. Same-sex partners in a civil union or a domestic partnership are not married for federal tax purposes.

Lastly, the IRS reviewed the timing for applying the Windsor decision. Rev. Rul. 2013-17 applies prospectively from September 16, 2013 forward. In addition, affected taxpayers may rely on the guidance for any open tax year, which will permit amending previously filed returns.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

Tax Implications of Supreme Court Decision Holding DOMA Unconstitutional

The Supreme Court recently  struck down the Defense of Marriage Act (“DOMA”).  Tax breaks that will now be available to same sex spouse include the ability to file a joint return, the opportunity to obtain spousal health insurance for the same sex spouse; and qualification as a surviving spouse to stretch out distributions under an IRA or qualified retirement plan. There are some unanswered questions after the ruling. For example, it is unclear how a same sex couple married in a state allowing for such marriage will be treated when living in a state that does not allow same sex marriage.

© 2013 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com