Brett R. Turner, Senior Attorney, Family Law
On June 26, 2013, the U.S. Supreme Court held in United States v. Windsor, No. 12-307, 2013 WL 3196928 (U.S. June 26, 2013), that section 3 of the Defense of Marriage Act, 1 U.S.C. § 7, is unconstitutional. Section 3 provides that for purposes of federal law, same-sex marriages are not recognized. Windsor held that in determining the marital status of same-sex couples, as in determining the marital status of opposite-sex couples, the federal government must defer to state law.
While state law is now controlling, many situations will arise in which state law is conflicting. This short note will take a preliminary look at choice-of-law issues in a post-Windsor world. The note is based upon a morning's worth of research, but not upon an exhaustive review of the entire field. As additional relevant points appear, the note will be kept updated.
At a very minimum, Windsor must mean that when a same-sex couple gets married and continues to live in a state that recognizes same-sex marriage, they have a valid marriage under federal law. Thus, they are entitled to federal benefits available to married persons, such as the right to file a joint tax return.
What if a same-sex couple gets married in a state that allows same-sex marriage but moves to a state that does not? Under federal tax law, "[f]or the purpose of establishing eligibility to file a joint Federal income tax return, the marital status of the two individuals is to be determined under the laws of the State of their residence." Von Tersch v. Comm'r, 47 T.C. 415, 419 (1967) (citing Rev. Rul. 58‑66, 1958‑1 C.B. 60); Lipton v. Comm'r, T.C. Summ. Op. 2007‑36, 2007 WL 686349, at *4 (2007).
The practical setting of Revenue Ruling 58-66 was common-law marriage. Most American states have abolished common-law marriage, but a small number of states retain it. See generally Nadine E. Roddy, Interstate Recognition of Common Law Marriages, 9 Divorce Litig. 200 (1997). Revenue Ruling 58-66 stated:
The marital status of individuals as determined under state law is recognized in the administration of the Federal income tax laws. Therefore, if applicable state law recognizes common‑law marriages, the status of individuals living in such relationship that the state would treat them as husband and wife is, for Federal income tax purposes, that of husband and wife.
The foregoing position of the Internal Revenue Service with respect to a common‑law marriage is equally applicable in the case of taxpayers who enter into a common‑law marriage in a state which recognizes such relationship and who later move into a state in which a ceremony is required to initiate the marital relationship. Accordingly, a taxpayer who enters into a common‑law marriage in a state which recognizes such marriages is entitled, under the provisions of section 151(b) of the Internal Revenue Code of 1954, to an exemption of $600 for his common‑law wife in making a separate income tax return, provided that, for the calendar year in which the taxable year of the taxpayer begins, she has no gross income and is not the dependent of another taxpayer. Also, for the purpose of filing a joint income tax return under section 6013(a) of the Code, a common‑law wife in a state which recognizes such marriages will be considered to be the taxpayer's spouse.
Rev. Rul. 58‑66. Thus, if a couple contracts a valid common-law marriage in one state, the IRS will treat that couple as married in all other states, regardless of where they move.
But common-law marriage is a very imperfect analogy to same-sex marriage. States differ on whether they will allow common-law marriage, but states that do not allow such marriages by their own citizens still universally recognize common-law marriages when contracted out of state. Roddy, supra. By contrast, many states that do not recognize same-sex marriage feel so strongly about the issue that they will not recognize an out-of-state same-sex marriage.
But the common-law marriage cases probably do mean that federal recognition of same-sex marriages depends upon whether the state in which the parties reside would recognize a same-sex marriage, and not upon whether the state would allow its own citizens of the same sex to marry. For example, Maryland, New York, and Rhode Island recognized out-of-state same-sex marriages as valid some time before actually allowing such marriages. If a same-sex couple gets married in a state allowing same-sex marriage, and then moves to a state that recognizes such marriage, the marriage remains valid for purposes of federal law, even if the new state does not allow its own same-sex citizens to marry. That is exactly the same fact situation as in the common-law marriage cases.
Another potential analogy is antimiscegenation laws—laws prohibiting marriages between persons of different races. The IRS held in Revenue Ruling 68-277 that it would treat all mixed-race marriages as valid, regardless of state law. Rev. Rul. 68-277, 1968-1 C.B. 526. But that Ruling expressly cited Loving v. Virginia, 388 U.S. 1 (1967), which held that antimiscegenation laws were invalid on their face. Windsor clearly did not hold that laws banning same-sex marriage are invalid on their face. Rather, it held that whether to enact such a law is a question of state law, which the states are free to resolve in either direction. Research has not revealed any decisions considering the validity of a mixed-race marriage, for purposes of federal law, in the pre-Loving era, where the parties moved after the marriage.
The more common situation will occur when parties to a same-sex marriage move to a state that refuses to recognize out-of-state same-sex marriages at all. Under the logic of Revenue Ruling 58-66, and federal case law relying upon it, there would seem to be a good argument that if an out-of-state same-sex marriage will not be recognized in the state in which the parties currently reside, there is no valid marriage under federal law. Thus, a married same-sex couple may indeed lose federal benefits if they move to a state that refuses to recognize their specific marriage. But that is clearly a different question from whether the new state allows its own same-sex residents to marry.
It is possible, of course, that the federal government may come under some degree of pressure to change the principles of Revenue Ruling 58-66. Indeed, supporters of same-sex marriage are already pushing the federal government to adopt a broad rule that it will recognize any marriage that is valid in the state in which it was celebrated, regardless of where the parties live. Revenue Ruling 58-66 is purely administrative, and it could presumably be changed without the need for congressional action. Congress could, of course, reverse any administrative changes, but such a reversal would require a majority of both houses and approval of the President, a requirement that could be difficult to meet.
An even harder situation occurs when a same-sex couple, living in a state that does not recognize same-sex marriage, travels briefly to another state and obtains a same-sex marriage there, without having resided or been domiciled in the second state. This situation has arisen often in the context of divorce, and the general rule is that a divorce can be granted only in a state in which at least one spouse has a bona fide domicile. Williams v. North Carolina, 325 U.S. 226 (1945). Jurisdiction to marry seems similar to jurisdiction to divorce. It is very possible that federal law may not recognize a same-sex marriage that is not valid in the state in which the parties reside, even if the marriage was celebrated during a brief trip to a state that does recognize same-sex marriage.
There are probably a fair number of cases in which parties have crossed a state border to marry, without being domiciled in the new state, and their marriage has been upheld in the state in which they reside. But, again, there is a fundamental difference between marriages that a state does not allow, and marriages that the state refuses to recognize, especially for reasons of public policy. A state may prefer that its opposite-sex residents marry locally, but it rarely has a fundamental objection when they choose to get married elsewhere. The field of same-sex marriage, however, is full of restrictions based upon public policy. As long as the Supreme Court continues to view same-sex marriage as a concept that states are free to recognize or not recognize, it seems likely that federal law will not recognize an out-of-state same-sex marriage that is not valid in the state in which the parties reside, even if it is valid in the state in which it was celebrated.
The broadest possible choice-of-law rule would require the federal government to recognize any facially valid marriage license, regardless of where the spouses reside, so long as the marriage is valid in the state in which it was issued. This is clearly not the current law outside the same-sex marriage area, at least in the tax setting; the law on the books provides that the law of the state in which the taxpayer resides is controlling. Rev. Rul. 58-66. But this rule arises primarily from common-law marriage cases, and a common-law marriage by definition has no formal license. There is room to argue that where a license does exist, the law of the state that issues the license is always controlling. But the greater likelihood is that the law of the taxpayer's residence will continue to be controlling.
So far, the discussion has assumed a single state of residence. But all married persons do not necessarily reside together. Assume that a same-sex couple marries in a state that permits same-sex marriage. They experience marital problems, and one spouse moves to a state that does not recognize same-sex marriage. Can the couple file a joint tax return? This is probably the most difficult situation. The most logical resolution is that the court should look to the last marital domicile—the last state in which the parties resided together. But there is room to argue that a joint tax return can be filed if either spouse resides in a state that recognizes the marriage, or to argue that the law of the state that issued the marriage license should be controlling.
The above discussion focuses primarily upon federal tax law, where the validity of a marriage has traditionally been determined by the law of the state in which the parties reside. The federal government provides married people with many benefits, and it is possible that different choice-of-law rules might apply outside the tax area.
Update (June 28, 2012): President Obama told reporters at a news conference, "It's my personal belief—but I'm speaking now as a president as opposed to as a lawyer—that if you've been married in Massachusetts and you move someplace else, you're still married, and that under federal law you should be able to obtain the benefits of any lawfully married couple."
But conservative groups are arguing that federal law should look to the state of domicile. "'We would support a narrower interpretation that would only apply to the state of domicile,' said Peter Sprigg, senior fellow at the Family Research Council, which filed a friend-of-the-court brief in support of DOMA."
Update (August 30, 2013):
The full text of Rev. Rul. 2013-17 has been released and is available here: http://www.irs.gov/pub/irs-drop/rr-13-17.pdf.
The ruling begins by recognizing that Windsor applies broadly to all issues of federal tax law. "In light of the Windsor decision . . . the Service also concludes that the terms ‘husband and wife,’ ‘husband,’ and ‘wife’ should be interpreted to include same-sex spouses" for purposes of federal income tax law." Rev. Rul. 2013-17 at 4.
The ruling then relies heavily upon Rev. Rul. 58-66, cited previously in this article, which held that the IRS will recognize common-law marriages which were valid in the state in which they were formed. The IRS will apply the same rule to same-sex marriages:
The Service has applied this rule with respect to common-law marriages for over 50 years,
despite the refusal of some states to give full faith and credit to common-law marriages established in other states. Although states have different rules of marriage recognition, uniform nationwide rules are essential for efficient and fair tax administration. A rule under which a couple’s marital status could change simply by moving from one state to another state would be prohibitively difficult and costly for the Service to administer, and for many taxpayers to apply.
Id. at 3.
Consistent with the longstanding position expressed in Revenue Ruling 58-66, the Service has determined to interpret the Code as incorporating a general rule, for Federal tax purposes, that recognizes the validity of a same-sex marriage that was valid in the state where it was entered into, regardless of the married couple’s place of domicile. The Service may provide additional guidance on this subject and on the application of Windsor with respect to Federal tax administration.
Id. at 9.
Under this rule, individuals of the same sex will be considered to be lawfully married under the Code as long as they were married in a state whose laws authorize the marriage of two individuals of the same sex, even if they are domiciled in a state that does not recognize the validity of same-sex marriages.
Id. at 10 (emphasis added).
Thus, even if the taxpayers are domiciled in a state which adamantly refuses to recognize same-sex marriages, they can spend a weekend in a state which does recognize such marriages, obtain a marriage license, and have a marriage which the IRS will recognize as valid for federal tax purposes.
The IRS cautioned, however, that a civil union is not a marriage. "For Federal tax purposes, the term ‘marriage’ does not include registered domestic partnerships, civil unions, or other similar formal relationships recognized under state law that are not denominated as a marriage under that state’s law." Id. at 13.
The new ruling expressly applies retroactively. "[A]ffected taxpayers also may rely on this revenue ruling for the purpose of filing original returns, amended returns, adjusted returns, or claims for credit or refund for any overpayment of tax resulting from these holdings, provided the applicable limitations period for filing such claim under section 6511 has not expired." Id. at 13. I.R.C. § 6511(a) provides:
Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid. Claim for credit or refund of an overpayment of any tax imposed by this title which is required to be paid by means of a stamp shall be filed by the taxpayer within 3 years from the time the tax was paid.
I.R.C. § 6511(a) (emphasis added).
Three observations are worth making. First, the IRS cites no authority to support its claim that states generally refused to give full faith and credit to common law marriages from other states. Such refusals were rare, and generally based upon failure to meet the elements of common law marriage, or in some cases upon a lack of sufficient time spent residing in the state which recognized common law marriage. The state law public policy objections against same sex marriage are many times stronger than the state law public policy objections to common law marriage have ever been. This is the weakest part of the IRS's reasoning.
Second, the real core of the IRS's reasoning is its concern that looking to any place other than the state of celebration will be administratively difficult. This is the strongest part of the IRS's reasoning. The cost of administering federal tax would be much greater under any other rule.
Third, the retroactivity provision is significant. Parties to same-sex marriages should consult with tax professionals as to whether filing amended returns for the past two to three years is advisable. There is good reason to suspect that many such returns will be filed. A significant side benefit of Windsor may be several years of full employment in the tax return preparation industry.
