What Does the Demise of DOMA Mean for Floridians?

What Does the Demise of DOMA mean for Floridians?

Section 3 of the of the Defense of Marriage Act (commonly known as DOMA) amended the Dictionary Act in Title 1, Section 7 of the United States Code to define “marriage” as only a legal union between one man and one woman as husband and wife and “spouse” as only a person of the opposite sex who is a husband or a wife.  Those definitions effected over a 1,000 federal laws, nearly 200 of which were statutory provisions under the Internal Revenue Service.  In U.S. v. Windsor, the U.S. Supreme Court held that Section 3 of DOMA (hereinafter, unless otherwise noted when referring to DOMA, I will be referring to Section 3 of DOMA) is unconstitutional.[1]  The Windsor ruling does not authorize same-sex marriages; rather, it provides that the definition of marriage is a state law determination.

DOMA was enacted in 1996 before any U.S. jurisdiction recognized same-sex marriages.  Since that time, thirteen (13) jurisdictions[2] have come to recognize same-sex marriages and eight (8) jurisdictions[3] have civil union or domestic partnership statutes, most of which grant rights and responsibilities common to a marriage.

For same-sex couples who are lawfully married and residing in one of the thirteen (13) jurisdictions that, as of this writing, recognize same-sex marriages, the Windsor decision provides that they will be recognized as married for federal law purposes as well.  Those same-sex married individuals will enjoy the federal benefits previously offered only to opposite-sex married individuals, such as the ability to:

  • File joint income tax returns;[4]
  • Claim increased exclusion from gain on sale of principal residence;
  • Claim unlimited marital deduction for federal estate and gift tax purposes;
  • Roll over qualified plan benefits to a new qualified retirement plan for the surviving spouse, thereby allowing longer deferral of federal income taxes;
  • Elect portability for the unused estate tax exemption of the spouse;
  • Elect to treat gifts made during the year as made one-half by each spouse (i.e., gift-splitting);
  • Receive tax preferences on divorce; and
  • Claim Social Security, Medicare and Medicaid benefits.

However, the Windsor decision did not resolve the federal treatment of lawfully married same-sex couples domiciled in jurisdictions that do not recognize same-sex marriages, such as Florida.  The primary question was whether federal law would look to the state of the ceremony and treat the same-sex couple as married for federal law purposes or to the state of domicile that does not recognize the same-sex marriage and treat each individual as single for federal law purposes.

Floridas Definition of Marriage

Article I, Section 27 of the Florida Constitution provides that the term “marriage” means the legal union of one man and one woman as husband and wife, and no other union that is treated as marriage or the substantial equivalent thereof shall be valid or recognized.  The amendment of Florida’s constitution requires approval of sixty percent (60%) of the voters.[5]  Section 741.212, Florida Statutes, amplifies that a same-sex marriage entered into in any jurisdiction will not be recognized in Florida.  Thus, Florida has clearly provided that it will not recognize same-sex marriages.  But is Florida required to recognize same-sex couples lawfully married in other jurisdictions?

Full Faith and Credit

The Full Faith and Credit clause of the U.S. Constitution (which provides that full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state) has generally not been extended to a state’s definition of marriage.  Furthermore, Section 2 of DOMA, which was not invalidated in the Windsor decision, provides that states are not required to recognize same-sex marriages from other states.  Lastly, states are not required to give full faith and credit to the acts of another state that would violate its public policy, which appears to be the case in Florida given its constitutional amendment.  Therefore, under current law, Florida is not required to recognize same-sex couples lawfully married in another jurisdiction.

Federalism Problem

Now that DOMA has been invalidated, federal law must turn to state law to determine when a marriage will be recognized.  Florida’s law conflicts with the law in other jurisdictions that allow or recognize same-sex marriages, which means that federal law must choose between the laws of competing jurisdictions.

The issue can arise in a number of different contexts.  For example, a same-sex couple may be lawfully married for years in one jurisdiction and subsequently move to Florida.  Will the couple become divorced for federal law purposes when they relocate to Florida?  Long time Florida residents can travel to, and marry in, a jurisdiction that recognizes same-sex marriages, and then return to Florida.  Should federal law look to Florida to define marriage in that instance?  Will federal law choose between competing states based on the facts and circumstances of each case?  Will the federal choice of law rules vary depending on the type of federal statute at issue (i.e., will the term spouse under the tax code mean something different than for immigration purposes)?

Federal Choice of Law

There are federal choice of law rules incorporated into certain statutes (they had been largely superseded by DOMA), but such rules have not been consistently incorporated into federal statutes and are by no means uniform.  To the extent the choice of law rules are not already incorporated into federal statutory provisions, which is largely true, the federal common law would apply.  However, there is no uniform federal choice of law rule applicable to the same-sex marriage issue.

In diversity cases (cases involving citizens of different states that do not involve a federal question), federal courts will follow the choice of law of the state in which the federal court sits.  Klaxon Co.  v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941).  However, the Klaxon rule has not been extended to cases involving federal questions (the meaning of marriage or spouse would be a federal question as it is a matter of construing a federal statute).[6]  Consequently, the questions concerning same-sex marriage are largely unanswered under federal common law.


Congress has the authority to solve the choice of law problem, and should act to provide uniformity and predictability to this area.  However, considering the current political environment in Washington, it seems unlikely that Congress will act to resolve this problem in the near term.  In the absence of Congressional action, can administrative agencies, such as the Treasury Department, act to resolve the problem?

Administrative Agencies

There is authority for an administrative agency promulgating choice of law rules concerning marriages.  Therefore, the Treasury Department could issue regulations providing choice of law rules to determine the meaning of marriage and spouse for federal tax law purposes.  However, regulatory action can be a time intensive process.

There is also authority for administrative rulings (as opposed to regulations) having the authority to control the definition of marriage.  For example, IRS Revenue Ruling 58-66, 1958-1 CB 60 provides that for federal income tax purposes, the IRS will recognize a common-law marriage created in a state that recognizes such marriages and will continue to do so if the taxpayers move to a state that requires a marriage ceremony.

Although there are certain drawbacks with administrative agencies determining the definitions of marriage and spouse, such as the potential for lack of uniformity between various administrative agencies, it seems that the current situation necessitates administrative agencies to act quickly to bring some clarity to the current situation.

Revenue Ruling 2013-17

On August 29, 2013, the United States Treasury Department and Internal Revenue Service issued Revenue Ruling 2013-17 addressing issues arising from the Windsor decision.  For Federal tax purposes, the IRS will now recognize all same-sex marriages validly entered into in any domestic or foreign jurisdiction sanctioning such marriages, regardless of the law of the individual’s domicile.  Therefore, all Floridians of the same-sex that were married in a jurisdiction sanctioning such marriages will be treated as married for Federal tax purposes even though Florida does not recognize such marriages.  See our blog post for a more detailed discussion of Revenue Ruling 2013-17.

How Should Such Floridians Report Their Federal Taxes?

With respect to the federal income tax, the extended due date for filing 2012 income and gift tax returns is October 15.  The effective date of Revenue Ruling 2013-17 is September 16, 2013.  Therefore, lawfully married same-sex couples may file their 2012 income tax returns as married individuals or as single individuals if they filed before September 16, 2013.  For taxpayers reporting their 2012 taxes after September 16, 2013 and for 2013 and subsequent years, lawfully married same-sex couples will be required to file their income taxes as married filing separately or jointly.


The U.S. Supreme Court’s holding that DOMA is unconstitutional means DOMA was never valid and effective.  DOMA was passed into law in 1996.  Massachusetts was the first U.S. jurisdiction to allow same-sex couples to marry in 2004.[7]  Therefore, there have been nine (9) calendar years during which same-sex couples have been forced to file returns as separate, single taxpayers under DOMA.[8]  It seems that individuals in a same-sex marriage have a claim that DOMA unconstitutionally deprived them (or his or her estate in the case of estate taxes) of property in the form of higher tax payments.  Assuming such claims are valid, can they be limited to “open” years not closed by the applicable statute of limitations?  Generally, the statute of limitations period for tax returns is three (3) years from the date of filing, which means that such taxpayers may have suffered damages in a number of now closed years.

Although not free from doubt, there is some case law[9] support for the proposition that the statute of limitations trumps a taxpayer’s constitutional claims.  Furthermore, there is an argument that the taxpayer had a procedural remedy available to him or her in those now closed years.  The taxpayer could have filed a protective claim for refund based on his or her claim of being lawfully married.  If a taxpayer did not file such a protective claim for refund to keep open the statute of limitations period, that taxpayer cannot seek to re-open those now closed periods.  In Revenue Ruling 2013-17, the IRS and U.S. Treasury Department made it clear that they will accept refund claims only for open years.

Employers and Employees

In Notice 2013-61, the IRS provided guidance for employers and employees to make claims for refund or adjustments of overpayments of FICA taxes and employment taxes with respect to certain benefits provided to same-sex spouses and compensation paid to same-sex spouses.  The Notice sets out special administrative procedures for employers to correct overpayments of employment taxes for 2013 and prior years, including overpayments that result from a taxpayer’s retroactive application of Rev. Rul. 2013-17, that are designed to reduce filing and reporting burdens.

Select Federal Tax Issues

After Rev. Rul. 2013-17, there are still many unanswered federal tax questions.  The holdings in Rev. Rul. 2013-17 are applied prospectively after September 16, 2013, which essentially means that same-sex married taxpayers have an opportunity to choose their tax status for open prior years (i.e., likely, they filed separately in prior years and can amend returns to file jointly or married filing separately, if beneficial).

This prospective application indicates that the IRS is not going to challenge the tax status (i.e., married or single) of lawfully married same-sex taxpayers for tax filings made prior to September 16, 2013.  Thus, this general rule should allow these taxpayers to determine the tax result for rules that automatically apply (i.e., no election by the taxpayer is required).

For example, if the taxpayers sold a principal residence and otherwise met the qualification requirements under Code § 121, they should be able to exclude up to $500,000 of gain from income as opposed to the $250,000 limitation for single taxpayers.  Similarly, if there were transfers between same-sex married individuals for consideration (i.e., an income tax event) or for no consideration (i.e., a gift), these taxpayers can amend returns to avoid income tax recognition under Code § 1041 or gift tax pursuant to the unlimited marital deduction under Code § 2523, but they do not have to amend returns if it is not beneficial to do so.

The questions concerning the application of the Windsor ruling apply to those situations where the taxpayer had to take some affirmative action to obtain the benefits afforded to married taxpayers.  Taxpayers have to exercise those actions by certain dates or the opportunity is lost.  Therefore, the question in those circumstances is whether the IRS will provide taxpayers relief to make retroactive elections for prior periods.  The following are some examples of this situation.

  • Spousal rollover of a qualified plan
  • QTIP/QDOT Elections (lifetime and testamentary)
  • Portability Election
  • Election to split gifts
  • Allocation of basis increase under Code § 1022
  • Code § 2032A election to specially value farm property

State Law Issues

As previously stated, the U.S. Supreme Court in the Windsor decision found that the definition of marriage was in the purview of the States.  In Hollingsworth v. Perry,[10] the U.S. Supreme Court avoided state constitutional issues by holding that the petitioners lacked standing.[11]  Therefore, each state can still define the term “marriage” and Florida’s definition of marriage as being any between one man and one woman is still good law.  Because the IRS and U.S. Treasury Department, as well as most other Federal agencies, have adopted a state of ceremony rule to determine whether a couple is married, same-sex couples domiciled in Florida but lawfully married in another jurisdiction will be considered married for most Federal law purposes, but will not be married under Florida.  Consequently, same-sex married individuals will not enjoy the marital rights afforded to opposite-sex married individuals, such as:

  • Homestead
  • Tenants by the Entirety
  • Elective Share
  • Preference in appointment as Personal Representative
  • Medical decisions
  • Burial decisions


There are still many unresolved issues concerning same-sex marriages; however, it is clear that same-sex married individuals should take some action now.  Those individuals should review their tax situation with their advisors to determine if it is advisable to file a claims for refund for open tax years.

[1]  U.S. v. Windsor, 111 AFTR 2d 2013-839.

[2]  Connecticut, Delaware, District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington.

[3]  California, Colorado, Hawaii, Nevada, New Jersey, Oregon, Wisconsin and Illinois.

[4]  If both individuals earn $36,250 of income or more annually (i.e., in a bracket greater than the 15% bracket) and each individual earns a similar amount of income to the other, then it is likely that the individuals will pay overall higher income taxes (commonly referred to as the marriage penalty) when filing jointly or married filing separately.

[5]  Section 5 of Article XI, Florida Constitution.

[6]  Interestingly, there is some authority that federal tax law can determine the meaning of marriage independent of state law.  In Estate of Borax v, Commissioner, 349 F.2d 666 (2d Cir 1965), the Second Circuit held, with respect to the divorce of a NY resident in Mexico that NY found invalid, that the test was not whether the divorce would be invalid in every state, but whether the divorce frustrated the revenue purposes of the federal tax laws.

[7]  Only five (5) foreign jurisdictions, the Netherlands, Belgium, Ontario, British Columbia and Quebec, allowed same-sex marriages at that time.

[8]  This period might be longer for same-sex couples lawfully married in a foreign jurisdiction.

[9]  See McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Dept. of Business, 496 U.S. 18 and Stone Container Corp. v. U.S., 229 F.3d 1345 (Fed. Cir. 2000).

[10]  130 S.Ct. 705 (2013).

[11]  This holding essentially made the California District Court’s ruling that Proposition 8, which amended California’s constitution to provide that only marriage between a man and a woman would be recognized in California, was unconstitutional, the controlling decision.