Taxing Equality: IRS Catches Up on Same Sex Regulations

Since 2013, the Internal Revenue Service has issued guidelines for same-sex married couples seeking guidance on tax treatment of their income tax returns.   Essentially, the publications explained the law that has been applicable to different sex spouses for many decades.  Of interest, the definition of a legal marriage looks to both domestic and foreign law and gives a broad definition on how and which marriages will be recognized for federal tax purposes.  That definition was important for couples who married in one state but lived in a state that did not recognize same sex marriages.   The Service had made it clear that it would look to the state of the marriage and not the state of domicile in  determining the couple's marital status.

Now the IRS has issued regulations (as opposed to prior guidance) addressing same sex marriage issues.  The updated regulations are a direct result of the Windsor decision which resulted from an estate tax dispute.  The regulations issued on Friday clarify the interpretation of the words marriage and spouses.  The interpretations are awkward in that they expand the definitions of "husband" and "wife" to include any two individuals married to each other. Perhaps at some point a more cooperative congress will amend the actual language of the Internal Revenue Code to remove the archaic and restrictive language. 

The new regulations make clear that domestic partnerships and other state sanctioned arrangements do not qualify as "marriages" under the new regulations. With the national availability of civil marriage to same sex couples, there is no need for the government to consider arguments relative to the qualification of other forms of union.  The new regulations clarify that the expanded definitions apply to income, estate and gift tax statutes and regulations.