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Tuesday, September 16, 2014

DOMA Tax Issues - Still Outstanding

Someone recently asked me what federal tax issues are still outstanding regarding DOMA and the effect of the June 2013 Windsor decision.  There are still a few income tax issues that come to mind (there are also estate and gift and state tax issues as well), that were not covered in the initial guidance (Rev. Rul. 2013-17).  Here is my list. Do you have any input or additional ones to add?

Amended returns
 
Will the IRS issue guidance to assist in the filing of amended returns? The current version of Form 1040X is not conducive to showing how two prior separate returns will now be treated as one MFJ return.

If a same-sex married employee tells his employer that he would like to get his FICA tax refunded by the employer, does that mean the employee must also amend his income tax form for that year to also use a married status? Notice 2013-61 and Rev. Rul. 2013-17 are silent on this question.

Assume a same-sex married taxpayer discovers an error on her 2011 return, such as omitted income. Can she amend it without changing her filing status? This likely depends on the proper interpretation of the effective date language of Rev. Rul. 2013-17. It includes this statement: “If an affected taxpayer files an original return, amended return adjusted return, or claim for credit or refund in reliance on this revenue ruling, all items required to be reported on the return or claim that are affected by the marital status of the taxpayer must be adjusted to be consistent with the marital status reported on the return or claim for refund.” [italics added]   Perhaps since the amended return is filed to correct an income omission, it is not filed "in reliance on this ruling". But if the taxpayer changes anything on the return to reflect a different filing status, then everything would need to be changed to reflect that status (including the spouse also amending if MFJ status will be claimed).

Audit of pre-2013 returns

If a same-sex married individual has a pre-2013 return audited, will the IRS change the marital status?

Will the individual be allowed to request such a change?
 
What do you think?

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