Treasury and IRS adopt ‘state of celebration’ rule for same-sex marriages — implications for employee benefit plans
By Susan Serota, Peter Hunt, Christine Richardson and Marta Porwit
The US Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued guidance treating a same-sex couple as ‘married’ for all federal tax purposes as long as the couple was legally married in a state or foreign country that recognises same-sex marriage, even if the couple resides in a state that does not recognise the validity of same-sex marriage.
On 26 June 2013, the US Supreme Court in United States v Windsor ruled that Section 3 of the Defense of Marriage Act, which had limited the definition of ‘marriage’ to marriage between a man and a woman for purposes of all federal law, was unconstitutional under the Equal Protection Clause of the Fifth Amendment. Despite its far-reaching effects on the federal tax treatment of same-sex spouses, Windsor provided no guidance on its practical implementation regarding payroll administration and employer-provided benefits.
One of the most vexing questions has been whether the IRS and employers should treat a same-sex couple as ‘married’ as long as the marriage was validly entered into in a state or country whose laws authorise same-sex marriage (the so-called ‘state of celebration’ approach), or whether such couples should be treated as ‘married’ only if (and when) they reside in a state that recognises same-sex marriage…
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