IRS Finalizes Taxpayer Definition Rules for Same-Sex Marriages

The Internal Revenue Service has issued final regulations redefining terms relating to marital status to include same-sex marriage for federal tax purposes, in accordance with Supreme Court decisions.

The rules reflect the Supreme Court’s landmark rulings in the 2015 case of Obergefell v. Hodges and the 2013 case of Windsor v. U.S., legalizing same-sex marriage in every state and invalidating the Defense of Marriage Act. Back in 2013, the IRS issued Revenue Ruling 2013-17, which discussed issues related to the Windsor case, such as whether, for federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex, if the individuals are lawfully married under state law. As the Windsor decision did not legalize same-sex marriage in every state, the revenue ruling also covered whether the IRS recognizes a same-sex marriage even in states that do not recognize the validity of same-sex marriages. The Obergefell decision wiped out that distinction, making same-sex marriage legal in every state.

Last fall, in response to the Supreme Court decision, the Treasury Department and the IRS issued a notice of proposed rulemaking, proposing to amend the regulations under section 7701 of the Tax Code to provide that, for federal tax purposes, the terms ‘‘spouse,’’ ‘‘husband,’’ and ‘‘wife’’ mean an individual lawfully married to another individual, and the term ‘‘husband and wife’’ means two individuals lawfully married to each other. 

In addition, the proposed regulations provided that a marriage of two individuals would be recognized for federal tax purposes if that marriage would be recognized by any state, possession or territory of the U.S. Finally, the proposed regulations clarified that the term ‘‘marriage’’ does not include registered domestic partnerships, civil unions, or similar relationships recognized under state law that are not denominated as a marriage under that state’s law, and the terms ‘‘spouse,’’ ‘‘husband and wife,’’ ‘‘husband,’’ and ‘‘wife’’ do not include individuals who have entered into such a relationship.

The newly finalized regulations, published last Friday in the Federal Register, amend the Income Tax Regulations, the Estate Tax Regulations, the Gift Tax Regulations, the Generation-Skipping Transfer Tax Regulations, the Employment Tax and Collection of Income Tax at Source Regulations, and the Regulations on Procedure and Administration.

The Treasury and the IRS received 12 comments on the proposed rules, including one commenter who suggested that the regulations specifically reference ‘‘same-sex marriage’’ so that the definitions apply regardless of gender and to avoid any potential issues of interpretation. The Treasury and the IRS, however, decided that the definitions in the proposed regulations should apply equally to same-sex couples and opposite-sex couples, and that no clarification was needed.