Lawmakers Await IRS Regulations For Tax Treatment Of Same-Sex Couples

Congressional lawmakers are awaiting clear guidance from the Internal Revenue Service following the June 26 U.S. Supreme Court’s decision in Windsor, which made it mandatory for the federal government to recognize same-sex marriages sanctioned by the states. Senate Finance Committee member Benjamin L. Cardin, (D-Md.) has requested that the IRS issue guidance that confirms the filing status of these couples in the wake of the Court’s ruling.

Cardin wrote a letter to Treasury Secretary Jack Lew and IRS Principal Deputy Commissioner Daniel Werfel on August 14 requesting that the IRS quickly release separate IRS publications dealing with their tax status, the celebration rule, retroactivity, and civil unions. “Given the importance of predictability and clarity in the application of our tax rules for financial planning, I urge the Service to move as expeditiously as possible to issue guidance as to how the law will be applied to married same-sex couples,” Cardin said in the letter.

Cardin’s missive is the latest request from lawmakers to address the issues raised by the Supreme Court’s decision to strike down Sec. 3 of the Defense of Marriage Act. In July, Sen. Barbara Boxer (D-Calif.) also requested speedy regulations from Lew, Werfel, Department of Health and Human Services Secretary Kathleen Sebelius and Acting Labor Secretary Seth D. Harris. In a July 10 letter, Boxer drew attention to the plight of unemployed same-sex spouses who could not extend COBRA health benefits to their dependents prior to the Court’s ruling. Boxer asked that federal remedies be quickly put in place to provide swift access to programs and benefits, and she promised to seek specific legislative changes where necessary.

Despite the Court’s ruling, Cardin and other lawmakers said that one chief problem that must be addressed is whether federal law will recognize the marriages of couples who were legally married in one state but reside in a state that does not recognize same-sex marriage. In order to have fair and administrable tax laws, the IRS should follow the precedent it set in Rev. Rul. 58-66, 1958-1 CB 60, that extends recognition to a marriage that is lawful in the state of creation, irrespective of whether the spouses’ state of domicile recognizes the marriage, Cardin said.

According to a recent report from the Congressional Research Service, the approximately 605,472 same-sex couples residing in the United States will face tax issues involving estate taxes, filing status, and tax brackets, income tax credits, nontaxable employee compensation, and amended returns.

IRS Deputy Chief Counsel-Technical Erik Corwin told tax practitioners at a D.C. bar luncheon in late July that the IRS is working on post-Windsor regulations, but he could not give a time frame for their release.

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