Planning impact on court reversal of doma

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Planning impact on court reversal of doma

Postby MN Finance » Wed Jun 26, 2013 9:06 pm

I know this is very recent, but if anyone has read a good summary of the financial planning impacts of the court ruling Id find that very helpful. On the surface it sounds like same sex marriages (in states which have it) would result in identical treatment as currently marriedcouples wrt federal issues like estate taxes, SS benefits, etc., but I would imagine in application its more nuanced.
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Re: Planning impact on court reversal of doma

Postby Peter Foley » Wed Jun 26, 2013 9:17 pm

I think this might have an impact on estate planning. Possibly allowing a simplier approach than trust for some couples. I'm not an estate planning expert so I'm only guessing.
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Re: Planning impact on court reversal of doma

Postby baw703916 » Wed Jun 26, 2013 9:21 pm

One thing that forum members who were forced by DOMA to file federal taxes under the "single" filing status may want to consider is whether they should file an amended federal return under the married filing status. This article advises the following:

the IRS will have to recognize same-sex marriages and same-sex couples will be able to claim refunds for federal tax overpayments made in the past when they were prevented from filing jointly.
...
There is a three-year statute of limitations on refund claims. This means that taxpayers must file claims for refunds within three years after the year of the return involved. Thus, anyone who could benefit by DOMA being held unconstitutional should file a claim for a refund now. By filing a claim now, couples will have be able to obtain refunds for overpayments dating back to 2009. The claim applies to income taxes, estate taxes, as well as gift taxes.
To file a protective claim, you must file an amended tax return for the year or years involved and disclose that it is a protective claim based on Windsor v United States.


As I understand it, the reason for filing a protective claim is that by the time all the legal implications of the decision for the tax code have been ironed out, the statute of limitations may have run out on one or more tax years. Also, I don't believe that anyone will have to file an amended return as a result of the ruling. It may not be advantageous to do so, for instance, if there would end up being a "marriage penalty" (usually this is the case when the two people have comparable incomes). So essentially it's a free do-over if the married filing status would be advantageous for the tax years in question.
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Re: Planning impact on court reversal of doma

Postby Rainier » Wed Jun 26, 2013 9:41 pm

Expect to see some write-ups in the coming days.

I read Kiplinger Tax Letter regularly and they make informed guesses about future rulings/legislation/etc., but they weren't talking about this at all.
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Re: Planning impact on court reversal of doma

Postby MN Finance » Wed Jun 26, 2013 9:47 pm

Ya, interesting there isn't much out there (though very new). I can think of a lot of issues: health accounts, decedent IRA spousal provisions, SS, estate taxes (fed and state), spousal IRA contributions, 529s, etc... just about everything.
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Re: Planning impact on court reversal of doma

Postby Rainier » Wed Jun 26, 2013 9:51 pm

MN Finance wrote:Ya, interesting there isn't much out there (though very new). I can think of a lot of issues: health accounts, decedent IRA spousal provisions, SS, estate taxes (fed and state), spousal IRA contributions, 529s, etc... just about everything.


Yes, it's huge.
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Re: Planning impact on court reversal of doma

Postby Jack » Wed Jun 26, 2013 9:58 pm

The ruling will have immediate effect on federal regulations and benefits for couples living in a same-sex marriage state. Some of these include social security and military spousal benefits, federal employment spousal benefits, family and medical leave, federal taxes, immigration green cards for spouses, insurance, bankruptcy and many others. The ruling does not require states to treat couples the same.

What is unclear is how the ruling will apply to couples married in a same-sex state but move to or live in a non-approving state. There are literally thousands of federal regulations that use marriage as a qualifier. Some of these are worded according to state of celebration (where a couple is married) and others are worded according to state of domicile of the couple. It remains to be seen how these contradictions are reconciled and whether this simply requires an executive order for clarification or whether it requires congressional action.

You can get a lot of details here:
http://www.lambdalegal.org/publications ... ma-summary
and here:
http://www.lambdalegal.org/publications/after-doma
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Re: Planning impact on court reversal of doma

Postby kd2008 » Wed Jun 26, 2013 10:01 pm

http://www.nytimes.com/2013/06/27/your- ... ml?hp&_r=0 provides some more info on the question asked by OP.
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Re: Planning impact on court reversal of doma

Postby frugaltype » Wed Jun 26, 2013 10:05 pm

I wonder if the woman who was part of one of the lawsuits gets a tax refund. Does filing a court case get past the three year limit problem?

"In 2009, Windsor's partner of 40 years, Thea Spyer, died after a battle with multiple sclerosis. Spyer left her estate to Windsor, but because their marriage was not legally recognized, Windsor was charged $363,053 in estate taxes."
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Re: Planning impact on court reversal of doma

Postby ObliviousInvestor » Wed Jun 26, 2013 10:42 pm

My understanding is that there are a lot of things that are simply up in the air at this point. No precedent. Many of the articles I've read are making assumptions that don't appear to have any basis.

I currently have inquiries in to the press offices at the IRS and SSA about several different questions. I'm interested to see if they respond. (In my experience, SSA's press office is usually super helpful, but I'm sure they're swamped right now.)
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Re: Planning impact on court reversal of doma

Postby JamesSFO » Wed Jun 26, 2013 10:47 pm

frugaltype wrote:I wonder if the woman who was part of one of the lawsuits gets a tax refund. Does filing a court case get past the three year limit problem?

"In 2009, Windsor's partner of 40 years, Thea Spyer, died after a battle with multiple sclerosis. Spyer left her estate to Windsor, but because their marriage was not legally recognized, Windsor was charged $363,053 in estate taxes."


In general, yes. She will either get her money back or not owe money.
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Re: Planning impact on court reversal of doma

Postby frugaltype » Wed Jun 26, 2013 10:57 pm

Here's one article.

The thing that seems crazy and to make this complicated is that the feds look to how a state determines marriage to decide if a couple is legally married or not.

It would seem to me that if a couple went through a marriage ceremony in a jurisdiction where their marriage was legal, they'd be married for federal purposes regardless of where they live in the future.

https://www.nytimes.com/2013/06/27/your ... ouses.html
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Re: Planning impact on court reversal of doma

Postby bsteiner » Wed Jun 26, 2013 11:12 pm

Now that persons in same-sex marriages know that they're married for Federal tax purposes (at least if they live in state that recognizes such marriages), they should review their estate planning to make sure it's geared to the Federal estate tax as it applies to married persons (assuming that's consistent with their objectives).
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Re: Planning impact on court reversal of doma

Postby Watty » Wed Jun 26, 2013 11:21 pm

Rainier wrote:
MN Finance wrote:Ya, interesting there isn't much out there (though very new). I can think of a lot of issues: health accounts, decedent IRA spousal provisions, SS, estate taxes (fed and state), spousal IRA contributions, 529s, etc... just about everything.


Yes, it's huge.


And it is not all positive for the people involved.

The "marriage penalty" can still affect some people.

http://en.wikipedia.org/wiki/Marriage_penalty

For some people being able to file two "single" federal tax returns actually worked out to their advantage and that will no longer be an option if they are legally married. If the decision is retroactive then I don't know if people could be required to refile for prior years and to pay additional taxes.

It would take some research but some people may also lose things like their Medicaid eligibility if there newly recognized spouse has too much income or assets. Student loans may also be adversely affected, both in qualifying for them and the collection of them.
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Re: Planning impact on court reversal of doma

Postby slippingsloth » Wed Jun 26, 2013 11:27 pm

Ya I wonder about things like reciprocity

IE you marry in DC or some place else where its legal but then move, does the state you move to have to honor your marriage? Do you lose your federal benefits just because you moved from Cali to Nevada? o this will be fun
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Re: Planning impact on court reversal of doma

Postby Default User BR » Thu Jun 27, 2013 1:37 am

slippingsloth wrote:Ya I wonder about things like reciprocity

IE you marry in DC or some place else where its legal but then move, does the state you move to have to honor your marriage? Do you lose your federal benefits just because you moved from Cali to Nevada? o this will be fun

Well, one might think so based on Article IV of the Constitution:
Section. 1.
Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.

However, in practice this hasn't worked in the past in many cases. For instance, states that in the past had anti-miscegenation laws generally didn't recognize marriages between the races from other states. In fact, some would arrest and prosecute interracial couples legally married elsewhere and living together there. One such case lead to the downfall of all such laws when the Supreme Court struck them down as being in violation of the 14th amendment.

As I understand it, the reason was the "public policy exception". Basically, if the state had a law concerning the matter, it was not required to substitute its law with that of another.

So states that currently have a law prohibiting same-sex marriage probably won't be required to recognize ones from other states.


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Re: Planning impact on court reversal of doma

Postby roymeo » Thu Jun 27, 2013 1:52 am

There's alot of 'smaller' impacts as well that a lot of people may not know about. My employer, like many tech companies, has a policy to try to help 'make up' for the negative effects of DOMA for married same-sex couples in regards to taxation of healthcare benefits, called 'topping up' or 'grossing up'. (Basically twice a year they pay out some extra to make up for the difference in federal taxes that have to be paid due to health benefit cost deductions to a married employee with a same-sex partner vs. an other-sex partner.)

So once the IRS figures out what's going on they'll need to let employers know what's going on so the employers can figure out what their options are for handling it, and then whatever impact will happen for employees who were able to receive this benefit. I wouldn't be surprised if there's some refiling going on after April 15th 2014 before the dust all settles, just from this one 'employment perk'.

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Re: Planning impact on court reversal of doma

Postby Epsilon Delta » Thu Jun 27, 2013 9:34 am

baw703916 wrote:One thing that forum members who were forced by DOMA to file federal taxes under the "single" filing status may want to consider is whether they should file an amended federal return under the married filing status. This article advises the following:

There is a three-year statute of limitations on refund claims. This means that taxpayers must file claims for refunds within three years after the year of the return involved. Thus, anyone who could benefit by DOMA being held unconstitutional should file a claim for a refund now. By filing a claim now, couples will have be able to obtain refunds for overpayments dating back to 2009. The claim applies to income taxes, estate taxes, as well as gift taxes.
To file a protective claim, you must file an amended tax return for the year or years involved and disclose that it is a protective claim based on Windsor v United States.



I would advise people affected by this to review when their oldest open tax year closes. In most cases this will be Oct 31 2013 (if you filed for an extension for 2009) or April 15 th 2014. I'd probably wait until a month or so before the deadline to see if the IRS issues any instructions before filing a claim.
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Re: Planning impact on court reversal of doma

Postby Bill M » Thu Jun 27, 2013 10:20 am

The thread title included the word "planning." For planning, its unclear whether there are any changes, (except, possibly, if you're willing to limit the living choices in retirement). A couple living in Massachusetts that retires to Florida could lose all those new benefits. Or someone whose job transfers them to Dallas...(shudder). A lot of this may get fixed over the next few years, but it will take time.
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Re: Planning impact on court reversal of doma

Postby Ged » Thu Jun 27, 2013 10:46 am

slippingsloth wrote:Ya I wonder about things like reciprocity

IE you marry in DC or some place else where its legal but then move, does the state you move to have to honor your marriage? Do you lose your federal benefits just because you moved from Cali to Nevada? o this will be fun


DOMA section 2 which was not challenged gives the state you reside in the ability to decide whether or not to recognize the marriage. This law is surprising to me because of this clause in the Constitution:

"Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof."

To have standing to challenge this you have to be a married gay couple who has moved to a state that does not recognize gay marriages from other states, and has been injured by the new state's policy. No-one has come forward yet to be the plaintiff, so apparently it isn't affecting many people. I know if I was part of a gay marriage I sure would be reluctant to move to a state that didn't recognize that marriage.

As far as Federal benefits for gay married couples who live in states that don't recognize their marriages, the status of the benefit will depend on how it is written. Some benefits will be granted, others won't. It's a very murky situation which will no doubt keep the lawyers busy.
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Re: Planning impact on court reversal of doma

Postby JamesSFO » Thu Jun 27, 2013 10:54 am

Ged wrote:
slippingsloth wrote:Ya I wonder about things like reciprocity

IE you marry in DC or some place else where its legal but then move, does the state you move to have to honor your marriage? Do you lose your federal benefits just because you moved from Cali to Nevada? o this will be fun


DOMA section 2 which was not challenged gives the state you reside in the ability to decide whether or not to recognize the marriage. This law is surprising to me because of this clause in the Constitution:

"Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof."

To have standing to challenge this you have to be a married gay couple who has moved to a state that does not recognize gay marriages from other states, and has been injured by the new state's policy. No-one has come forward yet to be the plaintiff, so apparently it isn't affecting many people. I know if I was part of a gay marriage I sure would be reluctant to move to a state that didn't recognize that marriage.

As far as Federal benefits for gay married couples who live in states that don't recognize their marriages, the status of the benefit will depend on how it is written. Some benefits will be granted, others won't. It's a very murky situation which will no doubt keep the lawyers busy.


The "beauty" if you will of our requirement for a case or controversy is that it waits until the issues are ripe. As of Aug 1 there will be 13 states + DC recognizing same sex marriage. Those people will start to move around and new cases will come up.

For the individuals facing those cases it can suck and it may take another 5-10 years for those cases to reach the Supreme Court.

That said given the shifting attitudes on this issue that may presage better outcomes, see this March 26 analysis by Nate Silver [edit] on the tipping point for 50% of states to have same sex marriage - http://fivethirtyeight.blogs.nytimes.com/2013/03/26/how-opinion-on-same-sex-marriage-is-changing-and-what-it-means/
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Re: Planning impact on court reversal of doma

Postby Default User BR » Thu Jun 27, 2013 10:59 am

Ged wrote:DOMA section 2 which was not challenged gives the state you reside in the ability to decide whether or not to recognize the marriage. This law is surprising to me because of this clause in the Constitution:

"Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof."

As I noted above, similar situations have been considered in the past. Generally the courts have held that if the state has a law concerning the matter, that takes precedence over the other state's laws.


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Re: Planning impact on court reversal of doma

Postby Aptenodytes » Thu Jun 27, 2013 11:19 am

frugaltype wrote:It would seem to me that if a couple went through a marriage ceremony in a jurisdiction where their marriage was legal, they'd be married for federal purposes regardless of where they live in the future.

Yes, that was what was the whole fuss was about and which the Court has now ruled on.
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Re: Planning impact on court reversal of doma

Postby Ged » Thu Jun 27, 2013 11:26 am

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Last edited by Ged on Thu Jun 27, 2013 11:29 am, edited 1 time in total.
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Re: Planning impact on court reversal of doma

Postby Ged » Thu Jun 27, 2013 11:29 am

Default User BR wrote:
Ged wrote:DOMA section 2 which was not challenged gives the state you reside in the ability to decide whether or not to recognize the marriage. This law is surprising to me because of this clause in the Constitution:

"Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof."

As I noted above, similar situations have been considered in the past. Generally the courts have held that if the state has a law concerning the matter, that takes precedence over the other state's laws.

Brian


Yes, but this is a Federal law, not a state law. States have handled differences in their marriage laws since the formation of the Union. This injects the Federal into something reserved for the states. It's really unneeded and can even be viewed as an attempt to modify the constitution by statute. Really just dumb.
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Re: Planning impact on court reversal of doma

Postby MN Finance » Thu Jun 27, 2013 11:31 am

Since I live in MN, I find it will be interesting. On the surface, you could surmise that you plan just like a traditionally married couple (other than someone relocating to another state), so it's not that difficult to plan. But I think the conversation will be a lot of work because someone not legally married has been putting plans in place given that reality, so now its actually a matter of unwinding all those previous plans to move more toward a conventional plan (say for ex. if the IRA was going to charity instead of surviving spouse because of the lack of spousal stretch provisions, or some obvious issues with estate tax planning)
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Re: Planning impact on court reversal of doma

Postby Phineas J. Whoopee » Thu Jun 27, 2013 11:38 am

Aptenodytes wrote:
frugaltype wrote:It would seem to me that if a couple went through a marriage ceremony in a jurisdiction where their marriage was legal, they'd be married for federal purposes regardless of where they live in the future.

Yes, that was what was the whole fuss was about and which the Court has now ruled on.

I don't think that's right.

Up until yesterday's decision, they were not married for federal purposes even if they lived in a state where same-sex marriage is legal, or one which had no same-sex marriage itself but chose, under DOMA section 2 (referenced above) to recognize other states' actions in respect, um, I'm not an attorney, really, thereof.

Now, for federal purposes, it depends on the federal purpose and perhaps on the state of domicile. This situation will take a long time to resolve in all details.

If my understanding is wrong I welcome correction.

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Re: Planning impact on court reversal of doma

Postby archbish99 » Thu Jun 27, 2013 11:41 am

frugaltype wrote:I wonder if the woman who was part of one of the lawsuits gets a tax refund. Does filing a court case get past the three year limit problem?

"In 2009, Windsor's partner of 40 years, Thea Spyer, died after a battle with multiple sclerosis. Spyer left her estate to Windsor, but because their marriage was not legally recognized, Windsor was charged $363,053 in estate taxes."

That was the case. She paid the tax to be in compliance, immediately filed for a refund on the grounds that they were married, was denied the refund, and proceeded to sue the IRS in tax court to receive her refund. Because she filed for the refund immediately, there's no statute of limitations. The District Court ruled that she's entitled to the refund already, but the Treasury hasn't paid (pending the Supreme Court appeal). The Supreme Court's most direct impact is a court order that the Treasury must now pay her the refund, plus interest.
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Re: Planning impact on court reversal of doma

Postby Bob's not my name » Thu Jun 27, 2013 11:43 am

baw703916 wrote:One thing that forum members who were forced by DOMA to file federal taxes under the "single" filing status may want to consider is whether they should file an amended federal return under the married filing status. This article advises the following:

the IRS will have to recognize same-sex marriages and same-sex couples will be able to claim refunds for federal tax overpayments made in the past when they were prevented from filing jointly.
...
There is a three-year statute of limitations on refund claims. This means that taxpayers must file claims for refunds within three years after the year of the return involved. Thus, anyone who could benefit by DOMA being held unconstitutional should file a claim for a refund now. By filing a claim now, couples will have be able to obtain refunds for overpayments dating back to 2009. The claim applies to income taxes, estate taxes, as well as gift taxes.
To file a protective claim, you must file an amended tax return for the year or years involved and disclose that it is a protective claim based on Windsor v United States.

As I understand it, the reason for filing a protective claim is that by the time all the legal implications of the decision for the tax code have been ironed out, the statute of limitations may have run out on one or more tax years. Also, I don't believe that anyone will have to file an amended return as a result of the ruling. It may not be advantageous to do so, for instance, if there would end up being a "marriage penalty" (usually this is the case when the two people have comparable incomes). So essentially it's a free do-over if the married filing status would be advantageous for the tax years in question.
Can you explain your basis for believing that amended returns will be optional? Is it based in law or are you assuming the administration will exercise prosecutorial discretion? Will heterosexual couples be able to claim unequal treatment if gay couples are exempted from paying the marriage penalty? Retroactive tax changes always have weird effects.
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Re: Planning impact on court reversal of doma

Postby Rupert » Thu Jun 27, 2013 11:54 am

Bob's not my name wrote:
baw703916 wrote:One thing that forum members who were forced by DOMA to file federal taxes under the "single" filing status may want to consider is whether they should file an amended federal return under the married filing status. This article advises the following:

the IRS will have to recognize same-sex marriages and same-sex couples will be able to claim refunds for federal tax overpayments made in the past when they were prevented from filing jointly.
...
There is a three-year statute of limitations on refund claims. This means that taxpayers must file claims for refunds within three years after the year of the return involved. Thus, anyone who could benefit by DOMA being held unconstitutional should file a claim for a refund now. By filing a claim now, couples will have be able to obtain refunds for overpayments dating back to 2009. The claim applies to income taxes, estate taxes, as well as gift taxes.
To file a protective claim, you must file an amended tax return for the year or years involved and disclose that it is a protective claim based on Windsor v United States.

As I understand it, the reason for filing a protective claim is that by the time all the legal implications of the decision for the tax code have been ironed out, the statute of limitations may have run out on one or more tax years. Also, I don't believe that anyone will have to file an amended return as a result of the ruling. It may not be advantageous to do so, for instance, if there would end up being a "marriage penalty" (usually this is the case when the two people have comparable incomes). So essentially it's a free do-over if the married filing status would be advantageous for the tax years in question.
Can you explain your basis for believing that amended returns will be optional? Is it based in law or are you assuming the administration will exercise prosecutorial discretion? Will heterosexual couples be able to claim unequal treatment if gay couples are exempted from paying the marriage penalty? Retroactive tax changes always have weird effects.


There would be an ex post facto problem trying to prosecute people for filing returns that complied with the law in effect at the time they were filed. It's not a matter of "prosecutorial discretion." It's a matter of constitutional law. Generally speaking, changes in law that benefit those affected may be applied retroactively. Changes in law that penalize those affected may only be applied prospectively. (And, yes, I am a lawyer).
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Re: Planning impact on court reversal of doma

Postby Bob's not my name » Thu Jun 27, 2013 12:03 pm

Thanks for the answer. But isn't it true that retroactive tax increases have been upheld?
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Re: Planning impact on court reversal of doma

Postby Rupert » Thu Jun 27, 2013 12:19 pm

Bob's not my name wrote:Thanks for the answer. But isn't it true that retroactive tax increases have been upheld?


Yes, they have been. The ex post facto clause applies to criminal laws, not civil ones, which is why I was careful in my answer to state that people couldn't be prosecuted for not amending tax returns in this context. (FYI & disclaimer: I'm a criminal defense lawyer who has defended persons charged with tax fraud, but I am not a tax lawyer per se). As for potential civil penalties, we're not really talking about a retroactive tax here, i.e., a new tax imposed by Congress and intentionally applied retroactively; DOMA's reversal results in a change of status for persons who complied with the law in effect when they filed their tax returns in the past. I don't think there's any precedent that would allow the IRS to go after such persons, even for civil penalties. But maybe a tax lawyer who knows better will chime in and address that point?
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Re: Planning impact on court reversal of doma

Postby neurosphere » Thu Jun 27, 2013 12:27 pm

I've gone through the thread and some of the links, but not sure I am confident about the answer to the following question:

As of TODAY, is it 100% settled that a gay couple married and living in a state which recognizes their marriage, will be able to file as "married filing jointly" for the 2013 tax year come April 2014?
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Re: Planning impact on court reversal of doma

Postby Rupert » Thu Jun 27, 2013 12:35 pm

neurosphere wrote:I've gone through the thread and some of the links, but not sure I am confident about the answer to the following question:

As of TODAY, is it 100% settled that a gay couple married and living in a state which recognizes their marriage, will be able to file as "married filing jointly" for the 2013 tax year come April 2014?


No, it is not 100% settled as of today. It will not be 100% settled until the IRS issues new regulations specifically addressing the issue. This is what the IRS has said so far:

IRS Statement on the Supreme Court Decision on the Defense of Marriage Act

We are reviewing the important June 26 Supreme Court decision on the Defense of Marriage Act. We will be working with the Department of Treasury and Department of Justice, and we will move swiftly to provide revised guidance in the near future.
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Re: Planning impact on court reversal of doma

Postby Epsilon Delta » Thu Jun 27, 2013 12:36 pm

Rupert wrote:DOMA's reversal results in a change of status for persons who complied with the law in effect when they filed their tax returns in the past. I don't think there's any precedent that would allow the IRS to go after such persons, even for civil penalties.

Rupert, I appreciate that as a criminal lawyer this will be outside your expertise, but perhaps a tax expert can answer:

Could the IRS go after them for just the tax with no penalties involved?
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Re: Planning impact on court reversal of doma

Postby baw703916 » Thu Jun 27, 2013 12:45 pm

Rupert,

Thanks for lending your legal expertise to this question.

Also, as a practical matter, some of the people affected would incur additional taxes by filing jointly, others would receive a refund. This depends entirely on the individual situation, and the IRS would have no way of knowing a priori who's tax liability would increase or decrease (probably neither would the individuals until they run the numbers). So the only way a retroactive approach could be done administratively (setting aside the legal questions for a moment) would be to require everybody affected to file amended returns for all the years in question. It's not clear that it would be easy or even possible to identify everybody who would need to file an amended return.

Brad
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Re: Planning impact on court reversal of doma

Postby linguini » Thu Jun 27, 2013 12:54 pm

Phineas J. Whoopee wrote:
Aptenodytes wrote:
frugaltype wrote:It would seem to me that if a couple went through a marriage ceremony in a jurisdiction where their marriage was legal, they'd be married for federal purposes regardless of where they live in the future.

Yes, that was what was the whole fuss was about and which the Court has now ruled on.

I don't think that's right.

Up until yesterday's decision, they were not married for federal purposes even if they lived in a state where same-sex marriage is legal, or one which had no same-sex marriage itself but chose, under DOMA section 2 (referenced above) to recognize other states' actions in respect, um, I'm not an attorney, really, thereof.

Now, for federal purposes, it depends on the federal purpose and perhaps on the state of domicile. This situation will take a long time to resolve in all details.

If my understanding is wrong I welcome correction.

PJW


There's a NYT article on it here: http://www.nytimes.com/2013/06/27/us/po ... .html?_r=0

The court's opinion is here: http://www.supremecourt.gov/opinions/12 ... 7_g2bh.pdf

I read through it, and didn't see any indication of whether the federal government can/must determine eligibility fo benefits based on state of domicile or state of marriage except in Scalia's descent. I guess for now it'll mostly be left to the legislature, executive branch agencies, and future court decisions.
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Re: Planning impact on court reversal of doma

Postby baw703916 » Thu Jun 27, 2013 12:56 pm

neurosphere wrote:I've gone through the thread and some of the links, but not sure I am confident about the answer to the following question:

As of TODAY, is it 100% settled that a gay couple married and living in a state which recognizes their marriage, will be able to file as "married filing jointly" for the 2013 tax year come April 2014?


The IRS hasn't come out with guidance yet, but I don't see how the result could possibly be otherwise. The actual case before the Court specifically dealt with the issue of whether the plaintiff's marriage was required to be recognized under Federal tax law--in particular, whether she could inherit her spouse's assets without them being subject to inheritance taxes. Since the ruling was that yes, it was required to be recognized, I don't see how the legal precedent wouldn't trivially apply to the tax treatment (e.g. filing status) of other individuals in an analogous situation.
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Re: Planning impact on court reversal of doma

Postby roymeo » Thu Jun 27, 2013 1:06 pm

baw703916 wrote: It's not clear that it would be easy or even possible to identify everybody who would need to file an amended return.

Brad


Bingo.

I would be very surprised if the IRS has any clue who is and isn't married before you tell them you are by your filing. We like to think of 'the government' as this giant, single entity, but I question the reality of every county clerk of court sending the info to some central database that is able to identify individuals from the little bit of information on marriage license applications (SSN?) which the IRS then polls to check that everyone is filing correctly. And that database would already have to be able to distinguish between couples that were and weren't 'counted' as married for different purposes due to DOMA.

I think it's just as likely that they're able to poll PRISM for your marriage status based on your Facebook status.

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Re: Planning impact on court reversal of doma

Postby Default User BR » Thu Jun 27, 2013 1:31 pm

Ged wrote:Yes, but this is a Federal law, not a state law. States have handled differences in their marriage laws since the formation of the Union. This injects the Federal into something reserved for the states. It's really unneeded and can even be viewed as an attempt to modify the constitution by statute. Really just dumb.

Yes, it might be unnecessary, as all it seems to do is state the "public policy exception". I don't know that it is something the Court would strike down.


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Re: Planning impact on court reversal of doma

Postby baw703916 » Thu Jun 27, 2013 1:48 pm

roymeo wrote:your marriage status based on your Facebook status.


"It's complicated"? ;)
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Re: Planning impact on court reversal of doma

Postby baw703916 » Thu Jun 27, 2013 2:07 pm

I just wanted to say a general thank you to everyone for keeping the thread on the financial planning aspects of the decision and not having it locked for politics.
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Re: Planning impact on court reversal of doma

Postby Epsilon Delta » Thu Jun 27, 2013 2:20 pm

roymeo wrote:
baw703916 wrote: It's not clear that it would be easy or even possible to identify everybody who would need to file an amended return.

Brad


Bingo.

I would be very surprised if the IRS has any clue who is and isn't married before you tell them you are by your filing.


There is nothing special here. Large parts of your return are on the honor system. In most case the IRS only knows that your married, divorced, lived apart from your spouse for the whole year, had a home office, business use of a car, charitable donations, etc. because you tell them. If you lie you'll often get away with it. But it's still tax evasion and if the issue comes up in an audit they'll still nail you.

Please note that I'm not saying that your required to file an ammendment in these circumstances, I'm simply saying that the argument that you don't have to because the IRS doesn't know who you are doesn't work.
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Re: Planning impact on court reversal of doma

Postby roymeo » Thu Jun 27, 2013 3:28 pm

(No one's making that argument.)
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Re: Planning impact on court reversal of doma

Postby runner26 » Thu Jun 27, 2013 3:31 pm

Pat Cain's blog is always informative. She posted on the fall of DOMA.

"One of the most piercing questions is: who will count as married for federal purposes? And, as it turns out, the answer to that question might vary from agency to agency. The Social Security Administration, for example, ..."

(more) http://law.scu.edu/same-sex-tax/doma-falls/
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Re: Planning impact on court reversal of doma

Postby Epsilon Delta » Thu Jun 27, 2013 4:21 pm

roymeo wrote:(No one's making that argument.)

Then it's unclear what argument you are making.
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Re: Planning impact on court reversal of doma

Postby roymeo » Thu Jun 27, 2013 4:52 pm

Epsilon Delta wrote:
roymeo wrote:(No one's making that argument.)

Then it's unclear what argument you are making.


Epsilon Delta wrote:
roymeo wrote:
baw703916 wrote: It's not clear that it would be easy or even possible to identify everybody who would need to file an amended return.

Brad


Bingo.

I would be very surprised if the IRS has any clue who is and isn't married before you tell them you are by your filing.


There is nothing special here. Large parts of your return are on the honor system. In most case the IRS only knows that your married, divorced, lived apart from your spouse for the whole year, had a home office, business use of a car, charitable donations, etc. because you tell them. If you lie you'll often get away with it. But it's still tax evasion and if the issue comes up in an audit they'll still nail you.

Please note that I'm not saying that your required to file an ammendment in these circumstances, I'm simply saying that the argument that you don't have to because the IRS doesn't know who you are doesn't work.


(Trying to be informational here, not confrontational.)

The "argument" is exactly as you stated in green: It's self-reporting, not in some mega-govt-DB.

Neither Brad nor I then took it to some false-reporting level. (Especially since the impetus for at least the timing of my personal legally binding contractual arrangement was for the tax-bonus, it never occurs to me that someone would lie about it to avoid a negative tax consequence.)
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Re: Planning impact on court reversal of doma

Postby baw703916 » Thu Jun 27, 2013 7:56 pm

Not to belabor the point, but once a tax return has been filed and accepted, the IRS must notify the filer in writing if they believe that there is an error, and ask the filer to (e.g. accept their recalculation of the tax liability, file an amended return, provide more information, etc.). There are currently many people out there who have "errors" on their tax returns from the last few years; namely, they were compelled by DOMA to submit returns claiming a fictitious "single" filing status. Assuming they acted in good faith (i.e. complied with the law and the IRS instructions as they existed at the time), then they would only be compelled to submit an amended return if the IRS contacts them and informs them that there is an error on their return. It's hard to imagine how the IRS could identify and contact all of the people to whom this applies, even if it were legally permitted to do so.

Brad
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Re: Planning impact on court reversal of doma

Postby runner26 » Thu Jun 27, 2013 8:30 pm

Herzig: The Tax Implications of Windsor

"I. Marriage Definition...
II. Implications to Tax Code...
III. Taxpayer Implications...

Further, we are going to have to contemplate the fallout from the Court declaring Section 3 of DOMA unconstitutional. It should have never existed, thus, all returns, payroll taxes, denials of benefits, refunds, etc. were improper ab initio. The rulings yesterday are not the end of the road but the beginning."

http://taxprof.typepad.com/files/tax-pr ... -op-ed.pdf
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Re: Planning impact on court reversal of doma

Postby Aptenodytes » Thu Jun 27, 2013 8:44 pm

neurosphere wrote:I've gone through the thread and some of the links, but not sure I am confident about the answer to the following question:

As of TODAY, is it 100% settled that a gay couple married and living in a state which recognizes their marriage, will be able to file as "married filing jointly" for the 2013 tax year come April 2014?

It depends on what you mean by 100% settled. To the extent that any future regulatory measure can be settled, this one now is.
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