A tax controversy may have arisen after a federal appeals court issued a decision in regard to the Defense of Marriage Act, known as DOMA. The Court of Appeals for the Second Circuit in New York declared that the law is unconstitutional. Another federal appeals court made the same conclusion prior to New York’s decision. The United States Supreme Court may be called on to weigh in on the constitutionality of the act in the future.
The current federal tax code does not recognize gay marriage. However, if the Supreme Court strikes down the constitutionality of DOMA, gay couples who are legally married could then file a claim for a refund of federal tax overpayments. Six states currently recognize same-sex marriage, including Massachusetts. Gay-rights activists and accountants have recommended that same-sex couples should file a protective refund claim. This claim goes to the Internal Revenue Service. This strategy will allow couples to receive a larger refund if the U.S. Supreme Court strikes down DOMA.
Same-sex couples should be aware that their time to file a protective refund claim does have a three-year time limit. If people file their claims now, they may be able to receive refunds back to 2009 returns.
Same-sex couples who are legally married — as well as those who are in domestic partnerships or civil unions — face unique challenges and may be affected by tax controversies. Tax attorneys can help explain how the contradictory Massachusetts state laws and the federal Defense of Marriage Act interact with one another. With a clearer understanding of their legal status, couples can consider the various tax advantages of joint tax returns in anticipation of a possible change of the federal law that currently prohibits same-sex marriage.
Source: The New York Times, “Gay Couples May Want to File a Protective Tax Refund Claim,” Ann Carnns, Oct. 31, 2012