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IRS and Treasury Apply “State of Celebration” Rule for Same-Sex Marriage

September 09, 2013

The Global Compensation, Benefits & ERISA Practice Group

Same sex marriage guidance is finally here, at least from a tax perspective.  Just last week,  the Treasury and the Internal Revenue Service issued

, holding that  same-sex couples who were married in a jurisdiction that recognizes same-sex marriages will be recognized as married for federal tax purposes, regardless of where they live (the “state of celebration” approach).  The Government also issued on August 29, 2013, providing additional insight. This guidance follows the Supreme Court’s June 26, 2013 holding in United States v. Windsor that Section 3 of the Defense of Marriage Act of 1996 (“DOMA”) unconstitutionally encroached on states’ rights to regulate marriage.
Here are a few key takeaways:

  • The Revenue Ruling significantly streamlines benefit plan administration.  By permitting plans to treat all legally married couples the same, regardless of their current state of residence or work, the Revenue Ruling eliminates the need for multiple benefit administration schemes at the federal level. 

  • The Revenue Ruling confirms that the IRS will allow taxpayers to apply the Revenue Ruling retroactively for open tax years.  In other words, same sex married couples and employers can file for refunds.  The IRS will issue streamlined procedures for doing so.

Now that the Government has provided some clarity regarding the treatment of same-sex marriages, employers should move ahead on needed benefit plan changes.  See our Stay Current publication on August 30, 2013,

for an expanded discussion of the Revenue Ruling and FAQS, a discussion of the differing standard under the FMLA and COBRA-related issues in connection with same, and a list of recommendations for employers.

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