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Final Regulations Implement Supreme Court's Same-Sex Marriage Decision for Federal Tax Purposes

Sep 13, 2016

HR360, Inc. 

September 9, 2016

Rules Clarify and Update Prior Guidance 

The Internal Revenue Service (IRS) recently issued final regulations providing (among other things) that a marriage of two individuals is generally recognized for federal tax purposes if the marriage is recognized by the state, possession, or territory of the United States in which the marriage is entered into, regardless of domicile. 

Background 

Last year, proposed rules were issued to implement the Supreme Court's 2015 decision in Obergefell v. Hodges. Specifically, the proposed regulations: 

Final rules were issued in September 2016. 

Final Rules 

Highlights of the final rules include the following: 

Effect on Prior Guidance 

These final regulations make Revenue Ruling 2013–17 obsolete as of September 2, 2016. However, taxpayers may continue to rely on guidance related to the application of Revenue Ruling 2013–17 to employee benefit plans and the benefits provided under such plans, including Notice 2013–61 (establishing special procedures for correcting overpayments with respect to employee benefits provided to same-sex spouses), Notice 2014–37 (addressing mid-year amendments to certain "safe harbor" qualified retirement plans), Notice 2014–19 (application of the Windsor decision to qualified retirement plans), Notice 2014–1 (regarding the participation by same-sex spouses in cafeteria plans, HSAs, and health FSAs), and Notice 2015–86 (application of Obergefell to qualified retirement plans and health and welfare plans) to the extent they are not modified, superseded, obsoleted, or clarified by subsequent guidance. 

The final rules apply to taxable years ending on or after September 2, 2016. Employers with questions on how to proceed regarding the administration of employee benefits for same-sex couples (or other applicable employment laws) are advised to review the final rules in their entirety and contact a knowledgeable employment law attorney.

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