Gay Couples: Filing an IRS Claim for DOMA-Related Tax Refunds

Gay couples can file claims with the IRS for DOMA-related tax refund claims.

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Although same-sex marriage is currently allowed in thirteen states, the IRS did not recognize these marriages for tax purposes until the recent Supreme Court ruling overturning some key provisions of the Defense of Marriage Act. The IRS was prevented from recognizing same-sex marriages because of the Defense of Marriage Act (DOMA), a federal law Congress passed in 1996 that bars federal recognition of same-sex marriages for all purposes, including insurance benefits for government employees, Social Security survivors' benefits, immigration, and the filing of joint tax returns. Under DOMA, gay couples could not file joint tax returns. Instead, they had to file their taxes as if they were unmarried individuals. This could result in additional taxes.

In one case, Edith Windsor married her partner in Canada and later inherited a substantial sum when the partner died. She ended up having to pay $363,053 in federal estate taxes because the IRS refused to recognize her as the surviving spouse of her deceased partner. Had the couple's marriage been recognized by the IRS, there would have been no federal estate taxes owed due to the unlimited marital deduction.

Windsor sued the federal government claiming that DOMA was unconstitutional. The federal appeals court in New York agreed with her, holding that the law violated gay peoples' right to equal protection under the law (Windsor v. United States). The United States Supreme Court agreed to hear the appeal. The Supreme Court agreed that DOMA is unconstitutional and struck down certain key provisions. As a result, the IRS will recognize same-sex marriages and same-sex couples can claim refunds for federal tax overpayments made in the past when they were prevented from filing jointly. 

In the aftermath of the Windsor case, there was uncertainty about how the IRS would treat tax filings by same-sex married couples who lived in a state that did not recognize same-sex marriage. This is because the IRS used the taxpayer's state of residence to determine whether he or she was married for tax purposes. Thirteen states and the District of Columbia recognize same sex marriage. These states include California, Connecticut, Delaware, Iowa, Massachusetts, Maine, Maryland, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. After the Windsor case, it was clear that same-sex spouses who lived in these states would now be able to file joint federal income tax returns as married couples. However, it appeared that same-sex spouses who lived in a state that did not recognize same-sex marriage would continue to be treated as unmarried by the IRS. For example, a same-sex couple who were married in Massachusetts but later moved to Florida, would be treated as unmarried. 

On August 29, 2013, the U.S. Department of Treasury and the IRS ruled that same-sex couples legally married in any jurisdiction would be treated as married for federal tax purposes, regardless of whether or not the couple lives in a state that recognizes same-sex marriage. "[This] ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide." said Secretary Jacob J. Lew. Now, all legally married same-sex couples can (and must) file as married beginning with their 2013 tax returns. 

For same-sex spouses, filing jointly could result in an income tax reduction--not just for this year, but for past years as well. In this event, they may be entitled to a tax refund for prior years. This can be accomplished by filing an amended tax return for each of the years involved.

There is generally a three-year statute of limitations on refund claims. This means that taxpayers must file their claims within three years after the year of the return involved. The three-year period has expired for 2009 for all taxpayers who filed their returns on or before April 15, 2010. However, for taxpayers who filed an extension and filed their returns during April 16-October 15, 2010, the three-year period will expire on October 15, 2013. 

Not all same-sex spouses will qualify for a tax reduction due to DOMA being held unconstitutional; but those who do should file a claim for a refund.

 September 2013

Updated by: , J.D.

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