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Tax Effects of DOMA Repeal in States Without Gay Marriage

The tax implications of a DOMA repeal in states with gay marriage are much discussed. In short, gay and lesbian couples legally married and living in a same-sex marriage state would be able to file their federal taxes jointly.

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What would a Supreme Court decision in favor of gay marriage mean for couple's taxes?

But what about for couples that do not live in a gay marriage state? Specifically, what happens if DOMA is repealed to couples that live, for example, in Florida, and go to Washington, D.C., to get married?

I’ve been thinking a lot about this, and it is unclear.

I’m a Florida tax attorney and former IRS lawyer, and I have yet to come across the definitive answer to this question. IRS regulations state that state law controls whether couples are married. But which state law applies? There are two possible answers:

Answer one: State of residence

Probably the most likely answer is that the state of residence determines whether the couple is married. Under this rule, even if a Florida couple goes to a different jurisdiction to get married, the federal government still would not recognize their marriage even after DOMA repeal because Florida itself would not recognize the marriage. That means no federal benefits, no joint filing of taxes, and so on.

Answer two: State of celebration

Under this rule, the laws of the state of celebration, or in other words, where the marriage took place, would control whether the federal government recognizes the marriage. Under this rule, as long as the marriage was legally and validly performed in a state, then the federal government would recognize the marriage. Even if you lived in a state, like Florida, that does not recognize the marriage.

This kind of rule would be complicated, however, as state tax returns, among other things, are based on federal returns. It would be unclear how to complete a Florida state tax return, as single individuals, if the federal return was filed jointly. This ambiguity is similar to what couples in gay marriage states face now when filing their federal returns.

Where have we seen this before?

In the past, the IRS had to deal with the question of whether common law marriages would be recognized. A common law marriage is a old, traditional form of marriage that some states allowed. It occured when a man and woman lived together and openly held themselves to the public as a married couple. The IRS states that as long as the common law marriage validly existed in the common law marriage state, then the IRS would recognize it, even if the couple moved to a state that did not recognize the marriage. This principal could apply to same-sex couples married in a state that offers gay marriage but living in a different state.

As a practical matter, the government will need to issue regulations to address this answer this question. Until then couples in a state without gay marriage could try filing jointly and see what the IRS will do. The answer may then be left to the courts.

Photo by Kevin Wong released under a Creative Commons license.

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Gideon Alper

Gideon Alper