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Houston same-sex couples get IRS recognition despite state’s law

Same-sex couples in Houston and around the country wondered if they would get a break on gift and estate taxes paid when property was passed from one spouse to the other after the U.S. Supreme Court’s declaration that the Defense of Marriage Act was unconstitutional. Gay couples doing their estate planning found that another ruling from the high court could be required before the Internal Revenue Service could be forced to alter the statute of limitations regarding amended tax returns, according to Bloomberg.

The issue, according to one legal expert, was that if a law is declared unconstitutional, that means that it was never constitutional, which in turn means that it’s like the law had never existed. He felt that this aspect of DOMA being ruled unconstitutional should take precedent over the IRS’s statute of limitations. In August 2013, the Treasury Department and the IRS announced that they would treat same-sex married couples as married for tax purposes, whether or not they lived in a state like Texas, which does not recognize those marriages.

As it stood, gay and lesbian taxpayers would be allowed to file a claim for a refund of gift or estate taxes that were paid prior to the SCOTUS decision. The IRS, however, limited these claims according to its current three-year statute of limitations. This means that returns amended due to the DOMA ruling would be accepted only for the tax years 2010, 2011 and 2012.

Whether a couple is same-sex or traditionally married, estate planning is a vital tool for wealth protection. Individuals who want to make sure that the distribution of assets at their death follows their wishes may find the services of a lawyer in Texas to be indispensable.

Source: Bloomberg, “Same-Sex Marriage Fight Looms Next on IRS Estate Refunds: Taxes“, Diane Freda, October 15, 2013