On June 26, 2013, the United States Supreme Court held in U.S. v. Windsor, 570 U.S. _____ (2013) that the surviving spouse of a same-sex couple was eligible to take the marital deduction on the federal estate tax return (I.R.S. Form 706) and that the federal Defense of Marriage Act (“DOMA”) was unconstitutional to the extent that it prohibited taking the deduction.
The majority opinion by Justice Kennedy begins with the proposition that the state, not the federal government, historically have had primary authority with respect to domestic relations – including marriage and divorce: “Consistent with this allocation of authority, the Federal Government, through our history, has deferred to state-law policy decisions with respect to domestic relations.” DOMA, in addition to intruding into an area historically subject to state regulation, singles out a class of married persons to be denied the benefits enjoyed by other marriage persons. Although it sounded as if Justice Kennedy was going to rule on federalism grounds, he instead determined that DOMA is unconstitutional as a violation of the “basic due process and equal protection principle applicable to the Federal Government,” under the Fifth Amendment to the Constitution.
The focus on marriage being primarily regulated by the states was the basis of the Maryland case recognizing a same-sex marriage from another jurisdiction before Maryland, by referendum, had expanded its definition of marriage for Maryland purposes. Port v. Cowan, 426 Md. 435, 44 A.2d 970 (2012).
This focus on the starting premise that every state may regulate marriage suggests that those definitions may trump laws to the contrary in other jurisdictions. Thus, New York law trumps DOMA which purported to establish a federal definition of marriage. The out of state marriage in Port v. Cowan trumped the law then existing in Maryland. The two cases are, however, very different.
Windsor strikes a federal statute because it acts unequally on a subgroup or class of married persons in these states that recognize same-sex marriage. This is the Fifth Amendment rationale. Judge Harrell recognized another jurisdiction’s definition of marriage on the basis of comity. Comity applies to the extent the other jurisdiction’s law did not violate the public policy of the state of the determining court. In a sense, comity is almost a federalism principle. Before the Maryland referendum, Port effectively recognized rights of couples with out of state marriages having greater rights than what then existed under the existing Maryland law.
The IRS has implemented Windsor as if it has embraced Port. Thus, same-sex couples married in jurisdictions recognizing same-sex marriages will be treated as married for all federal tax purposes regardless of whether they reside in a state that recognizes the marriage. Rev. Rule 2013-17. Also, married same-sex couples must file their 2013 federal income tax returns either filing jointly or married filing separately. These taxpayers may, but are not required to, amend returns for all years still open. Notice IR – 2013-72.
The Windsor case makes estate planning much easier. After the referendum but before Windsor, a marital deduction would apply for Maryland, but not federal, purposes. Yet the Maryland estate tax return follows the federal return. Windsor permits uniformity between the Maryland treatment and the federal treatment for estate tax purposes. The revenue procedure and revenue amount does the same for income tax purposes.
