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

Oct 30, 2015

HR360, Inc.
October 23, 2015

Rules Clarify and Update Prior Guidance

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) recently issued proposed regulations providing that a marriage of two individuals, whether of the same sex or the opposite sex, will be recognized for federal tax purposes if that marriage is recognized by any state, possession, or territory of the United States. 

Proposed Regulations
The proposed regulations implement the Supreme Court's 2015 decision in Obergefell v. Hodges. Specifically, the proposed regulations:

The proposed regulations will apply to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

However, the proposed regulations would not treat registered domestic partnerships, civil unions, or similar relationships not denominated as marriage under state law as marriage for federal tax purposes. These individuals can retain their status as single for federal tax purposes.

Effect on Prior Guidance
Taxpayers may continue to rely on guidance related to the application of IRS 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), and Notice 2014-1 (regarding the participation by same-sex spouses in cafeteria plans, HSAs, and health FSAs).

The proposed rules will apply to taxable years ending on or after October 23, 2015. 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 proposed rules in their entirety and contact a knowledgeable employment law attorney.

For more information on same-sex marriage laws specific to your state, visit our State Laws section, click on your state, and select "Same-Sex Relationships" from the left-hand navigation menu.

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