On October 21, 2015, the IRS issued proposed regulations to clarify the treatment of same-sex spouses for federal tax purposes. By way of background, in 2013, the United States Supreme Court held in United States v. Windsor that the portion of the Defense of Marriage Act defining marriage as being between opposite-sex partners was unconstitutional. Shortly following the Windsor decision, the IRS issued guidance recognizing, for federal tax purposes, same-sex marriages performed in states permitting such marriages. As previously reported, the Supreme Court recently held in Obergefell v. Hodges, that the Fourteenth Amendment’s Due Process and Equal Protection Clauses required states to allow same-sex marriage and to recognize same-sex marriages performed in other states.
The proposed regulations provide that all marriages, whether opposite-sex or same-sex, will be recognized by the IRS for federal tax purposes if the marriage is recognized by any state, possession or territory of the United States. Additionally, the proposed regulations address the impact that Windsor and Obergefell has on gender-specific terms, such as “husband” and “wife.” To ensure that same-sex marriages are treated equally for federal tax purposes, the proposed regulations clarify that the terms “husband” and “wife” will be interpreted neutrally to include same-sex and opposite-sex spouses.
Similar to the IRS’s previous guidance, the proposed regulations provide that registered domestic partnerships, civil unions and other similar relationships are not considered marriages for federal tax purposes. Also, marriages performed in a foreign jurisdiction will be recognized for federal tax purposes only if the marriage would be recognized by at least one state, possession or territory of the United States.
The proposed regulations explain that previous guidance related to same-sex marriages, such as Rev. Rul. 2013-17 and IRS Notice 2014-19, remain in effect and that additional guidance may be issued in the future.