In a letter to the Internal Revenue Service, the American Institute of CPAs covered important questions that taxpayers and practitioners are struggling to answer across several areas of the tax code in the wake of the U.S. Supreme Court’s decision in June on section 3 of the Defense of Marriage Act (DOMA). For example, the letter asks, if same-sex married employees amend Form 1040 to change the filing status, should they request a FICA tax refund? Another concern is helping taxpayers know whether they qualify for federal tax benefits.
“To avoid inconsistencies and difficult legal interpretations for taxpayers, it would help if the IRS would provide a list of states in which a civil union or [Registered Domestic Partners] is considered a marriage for federal tax purposes,” the AICPA suggested in the October 30, 2013 letter. It noted examples of states where it may be unclear, such as Illinois, where the IRS Chief Counsel has previously recognized civil unions for opposite sex couples as qualifying for those benefits.
Other issues for which the AICPA requested guidance include:
- Whether special notations are needed on amended returns to aid in the processing of forms filed by couples who choose to amend their returns to convert to joint status;
- The tax treatment of payments that qualify as alimony to/from a former same-sex marriage partner;
- The tax-free transfer of property between spouses;
- The process for estates to claim portability of the estate tax exemption if they did not file Form 706 because they were below the filing threshold.
The AICPA Tax Division updated the DOMA Client Tax Issues List that outlines the various issues that will affect clients as a result of the Defense of Marriage Act (DOMA) ruling, such as filing and amending tax returns, filing protective tax refund claims, and estate tax planning issues. For more information and resources see the AICPA DOMA Ruling Individual Tax Impact web page, as well as the DOMA Ruling Estate and Gift Tax Impact web page.