States to Refund Estate Tax Paid by Surviving Same-Sex Spouses
In June 2013, the United States Supreme Court struck down part of the federal Defense of Marriage Act, ruling that the IRS had to treat legally married same-sex couples the same way it treats other married couples. (For more, see The Supreme Court's DOMA Decision.) The case had arisen because a widow had been required to pay federal estate tax after her same-sex spouse had died - unlike the survivors in opposite-sex couples, who were allowed to inherit tax-free. When she won her case, she became entitled to a refund from the IRS.
Are other surviving same-sex spouses entitled to refunds from the federal or their state government, too? Yes, and states will be clarifying the rules. So far, Vermont has announced that it will be issuing refunds, and New York has outlined its refund plans in a document issued by the state's Department of Taxation and Finance.
New York has treated same-sex couples equally, for estate tax purposes, since July 24, 2011, the effective date of the state's Marriage Equality Act. (See Implementation of the Marriage Equality Act Related to the New York State Estate Tax.) It will now extend that treatment retroactively. Taxpayers seeking a refund of New York estate tax can apply if their claim is not barred by the state's statute of limitations. Generally, that means you can file a claim for a refund:
• three years after the original estate tax return was filed (or if it was filed before the due date, three years from the due date) or
• two years after the tax was paid, whichever is later.