Windsor

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Here’s something that should be at the top of your to do list on this Monday morning:  make sure your benefits and other employee policies are in compliance with new guidance from the IRS that becomes effective today relating to federal tax treatment of same-sex marriages under the U.S. Supreme Court’s decision in U.S. v. Windsor.  In Windsor, the Supreme Court struck down provisions of the Defense of Marriage Act (“DOMA”), which had prohibited recognition of same-sex marriages under federal law. That decision has several implications for employers, including application of employee leave laws such as the Family Medical Leave Act (“FMLA”), which we blogged about recently.

Since the Windsor ruling, federal agencies have been busy carrying out President Obama’s directive to update regulations and guidance accordingly.  On August 29, the IRS issued Revenue Ruling 2013-17 and two sets of FAQs (here and here), advising how the IRS will treat same-sex marriages for federal tax purposes. (Windsor was, after all, a tax case, in which the issue was whether the IRS was allowed to disregard a same-sex marriage for federal estate tax purposes).  The guidance becomes effective today, September 16, 2013.

Under that new guidance, the IRS will apply the marriage laws of the state or country in which the marriage was celebrated (‘state of celebration”) to determine if the couple is validly married for federal tax purposes, including tax and other issues relating to employee benefits.  Under the new IRS guidance, any same-sex marriage validly entered into in any state or foreign country that allows same-sex marriage will be recognized by the IRS for income, estate, and other tax purposes, even if the couple does not live or work in a state that recognizes the marriage.  For example, if a same-sex couple is married in Washington (or Canada), which recognizes same-sex marriage, and then moves to Oregon, which currently does not, the couple will still be considered married for federal tax purposes.Continue Reading Employers Should Review Benefits Plans And Other Policies Affecting Employees In Same-Sex Marriages As New IRS Guidance Implementing U.S. Supreme Court’s Windsor Decision Becomes Effective Today, September 16, 2013

As almost everyone knows, the U.S. Supreme Court  issued two blockbuster decisions on gay marriage, U.S. v. Windsor, which struck down the Defense of Marriage Act’s ("DOMA") definition of marriage for the purposes of federal law, and Hollingsworth v. Perry, which struck down California’s "Proposition 8" prohibiting same-sex marriage in that state.  Those decisions will likely have significant effects on employers, such as with respect to employee benefits, health care and tax issues related to employees with same-sex partners.  For example,read here for a detailed discussion of how the Supreme Court’s decisions may impact employee benefits.

Those decisions, particularly Windsor, also will have an immediate impact on employee coverage under the federal Family Medical Leave Act ("FMLA"), which requires covered employers to provide up to 12 weeks per year of unpaid leave to eligible employees for qualifying reasons (more leave may be required in certain situations, such as leave related to military duty).  One such qualifying reason entitles an employee to take leave to care for a family member, such as a family member with a serious health condition.  FMLA specifically defines family members to include a "spouse," which is further defined to mean a "husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized."  29 CFR 825.122.  Despite the fact that states have begun recognizing same-sex marriage in recent years, because the DOMA specifically defined marriage as only between a man and woman for the purposes of federal law, the DOMA basically overrode those states’ laws for the purposes of FMLA coverage to spouses.Continue Reading U.S. Supreme Court’s Decisions on DOMA Extend FMLA Definition of “Spouse” To Same-Sex Partners In States Recognizing Gay Marriage