Daily Tax Update - August 29, 2013: Treasury, IRS Issue Guidance Recognizing Same-Sex Marriages for Federal Tax Purposes

Treasury, IRS Issue Guidance Recognizing Same-Sex Marriages for Federal Tax Purposes:  Today, the Treasury Department and the IRS ruled (Rev. Rul. 2013-17) that “same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes.  The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.  The ruling implements federal tax aspects of the June 26 Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.”  According to the guidance, “[S]ame sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes.  The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA, and claiming the earned income tax credit or child tax credit.”  The guidance adds, “Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling.  However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.”

Treasury Secretary Jacob Lew said, “Today’s ruling provides certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide.  It provides access to benefits, responsibilities and protections under federal tax law that all Americans deserve.  This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”

The IRS also released FAQs via: FAQs Same-Sex Spouses 8-29-2013 (2)[1].pdf  and FAQs Registered Domestic Partner 8-29-2013 (2).pdf

U.S. and Switzerland Issue Joint Statement Regarding Tax Evasion Investigations:  The Department of Justice (DOJ)  today announced a program that will “encourage Swiss banks to cooperate in the department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion.  The department also released a joint statement with the Swiss Federal Department of Finance, stating that Switzerland will encourage its banks to participate in the program.”

 Attorney General Eric Holder said, “This program will significantly enhance the Justice Department's ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States.  In addition to strengthening our partnership with the Swiss government, the program’s requirement that Swiss banks provide detailed account information will improve our ability to bring tax dollars back to the U.S. Treasury from across the globe.”

The DOJ’s press release states that, “Under the program, which is available only to banks that are not currently under criminal investigation by the department for their offshore activities, participating Swiss banks will be required to:

  • Agree to pay substantial penalties
  • Make a complete disclosure of their cross-border activities
  • Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest
  • Cooperate in treaty requests for account information
  • Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed
  • Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations.”

DOJ added, “The program does not address current or future investigations and pending cases concerning bank employees, financial advisors and other individuals.  The department will address each of these cases only with the individual’s counsel, in a manner that gives consideration to the particular facts and circumstances of each case.”

Additional information can be accessed here.