Marriage equality: taxes, death, and everything in between.

• Author: McCumber, Aryn

As of Sept. 2, 2016, same-sex married couples have certainty with regard to the Internal Revenue Code's recognition of their married status for tax purposes. On that date, the IRS issued final regulations (T.D. 9785) to reflect the holdings in two recent Supreme Court cases.

Marriage Equality

Historically, the status of marriage was determined under state law. In 1996, however, Congress enacted the Defense of Marriage Act (DOMA), P.L. 104-199, which defined marriage for all federal purposes as a legal union between one man and one woman as husband and wife and defined "spouse" as referring only to a person of the opposite sex who is a husband or wife. As a result, the IRS was prohibited from treating partners or spouses in same-sex marriages, which became legal under certain states' laws, as husband and wife, and thus same-sex couples were not permitted to file a joint federal income tax return (see, e.g., Mueller, 39 Fed. Appx. 437 (7th Cir. 2002)). Uncertainty for same-sex couples in federal taxes ensued during the 2000s, until the U.S. Supreme Court became involved in 2013.

In Windsor, 570 U.S. 12 (2013), the Supreme Court struck down the definition of marriage in Section 3 of DOMA as only between a man and a woman. Two years later, the Supreme Court in Obergefell v. Hodges, 135 S. Ct. 2584 (2015), went a step further and held that, under the Fourteenth Amendment, same-sex couples have a fundamental right to marriage. As such, the Court held that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex and requires states to recognize same-sex marriages lawfully performed outside the state, effectively striking down Section 2 of DOMA.

In 2016, the IRS issued final regulations reflecting the holdings of Obergefell and Windsor, as well as some portions of IRS guidance issued in response to both cases. Under Regs. Sec. 301.7701-18(b) (1), a marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by the state, possession, or territory of the United States in which the marriage is entered into, regardless of the married couple's place of domicile.

In addition, under Regs. Sec. 301.7701-18(b)(2), two individuals entering into a relationship denominated as marriage under the laws of a foreign jurisdiction are married for federal tax purposes if the relationship would be recognized as a marriage under the laws of at least one state, possession, or territory of the United States. This rule enables couples who are married in foreign jurisdictions to determine marriage for federal tax purposes regardless of...