Private: The Constitution and Tax Law After Windsor

by Robin Maril, Senior Legislative Counsel, Human Rights Campaign. This post is part of our 2014 Constitution Day symposium.

Following last summer’s Supreme Court decision in U.S. v. Windsor invalidating Section 3 of the Defense of Marriage Act (DOMA), the federal government began recognizing same-sex couples nationwide for the first time. The majority of federal benefits and programs recognize couples regardless of where they live – employing a “state of celebration” standard. This standard looks to the laws of the state where the couple was married to determine the validity of their marriage. In practice, this has provided expansive recognition for legally married same-sex couples nationwide — including for federal tax purposes.

In response to the Windsor decision, the IRS published revenue ruling 58-66 implementing a state of celebration standard for federal tax purposes and applying the generally applicable statute of limitations for requesting a refund to same-sex couples who were legally married and would have been recognized under IRS policy but for DOMA. This standard statute of limitations provides all taxpayers with an option to amend a tax return up to three years after filing. This revenue ruling therefore retroactively recognizes same-sex married couples who were legally married but were required to file as individuals because of DOMA beginning in 2010.  

A three year look back provides only partial redress for the many same-sex couples who paid a significantly higher tax bill despite being recognized in their home state prior to 2010. Couples living in Massachusetts, for example, who have been married since 2004 forfeit six years of recognition under this policy. For many of these couples, the financial loss is significant. Under DOMA, the lack of recognition for federal tax purposes resulted in a higher tax bill for many couples who would otherwise receive a “marriage benefit.” Same-sex couples also paid significantly more in taxes if they had employer provided spousal health care.  In the absence of marriage recognition, the cost of these health benefits was imputed as additional taxable income — a penalty different sex married couples avoided. 

The Windsor decision clearly invalidated Section 3 of DOMA, finding the law to be unconstitutional as a violation of the 5^th amendment. Windsor does not indicate that DOMA became unconstitutional after passage, but rather provides that the core precepts of the law were unconstitutional from its inception as illustrated by legislative history and furthered by its defenders to the Court.

The effect of this decision on the recognition of marriages for purposes of federal benefits and programs cannot be more clear. Statutes that are determined to be unconstitutional are void ab initio, or invalid from the beginning. Longstanding Supreme Court precedent in Norton v. Shelby County provides that “An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.” Denying same-sex married couples the opportunity to amend tax returns beyond the normal assessment period of three years, continues to validate a statute that was void upon passage and has now been clearly discredited as unconstitutional.

The IRS has the administrative infrastructure to go beyond the standard three year look back when necessary. In fact, the U.S. Code provides a six year statute of limitations to audit foreign accounts, returns with substantial underpayment, and to pursue most federal tax crimes. The IRS has a ten year window collect an unpaid tax by levy or law suit.  Either the Court or Congress must take steps to end this inappropriate enforcement and allow couples to amend their returns beyond the generally applicable standard. To provide any less misinterprets this landmark decision, fosters the continued discriminatory harm of an unconstitutional act, and ignores longstanding Supreme Court precedent for relief.

Equality and Liberty, LGBTQ Equality