In October 2013, the Oregon Department of Justice (“DOJ”) issued a decision to allow State agencies to recognize out of state same sex marriages. (See my previous blog posting on October 8). Now, effective January 1, 2014, a new Oregon Administrative Rule requires all State agencies to recognize same sex marriages validly performed in other jurisdictions. OAR 105-010-0018. This rule follows the reasoning of the DOJ’s decision that the state must recognize those same-sex marriages in order to comport with the United States Constitution. The rule expires on June 30, 2014 and is intended to give agencies time to adopt specific rules and procedures implementing this mandate prior to the expiration date. We expect to see agencies come out with their new rules and procedures over the next six months, which should provide more clarity for same-sex couples in Oregon.
DOMA
Join us for a DOMA roundtable discussion
COMPLIMENTARY EVENT SERIES
Upcoming Events
Samuels Yoelin Kantor LLP’s event series helps keep our clients and colleagues informed on recent developments and industry best practices. Our seminars and roundtable discussions typically take place in our beautiful, state-of-the-art conference room on the 38th floor of the US Bancorp Tower.
Events are complimentary. To register, please use the links below or call us at 503-226-2966.Seating is limited, so be sure to contact us soon!
Roundtable Discussion: How Has the Standard of Care Changed for Oregon Practitioners as a Result of The Supreme Court’s Repeal of the Defense of Marriage Act (DOMA)?
Thursday, August 8: 7:30 – 9:00 am
at the Samuels Yoelin Kantor LLP offices
Light refreshments will be served
Presenters:
Chris Costantino, Valerie Sasaki, Eric Wieland and Emily Clark of Samuels Yoelin Kantor LLP
We are excited about working through the legal implications and challenges the recent DOMA ruling brings. We’re hosting a roundtable discussion to talk with our clients, friends and colleagues about the law, and to learn from you how the ruling impacts your clients and your businesses as well. Please join us for what will prove to be an interesting discussion about the landmark decision that impacts you, your friends, your family, your business or your clients
To register for this discussion, please contact us at events@samuelslaw.com or 503-226-2966. Space is limited, so be sure to contact us soon.
How United States v. Windsor Impacts Oregon Domestic Partners
United States v. Windsor struck down Section 3 of the Defense of Marriage Act and recognized the same sex marriage of Ms. Windsor and Ms. Spyer for the marital deduction for federal estate tax purposes. However, the still leaves wealthy families and estate planners with some questions. It is clear from the decision that couples who are married in states that recognize same-sex marriage, among them Washington and California (based on Prop 8 decision), will now have access to the marital deduction under the federal estate tax, as well as a bevy of other federal benefits. What is less clear is what happens if those couples move to a state like Oregon, which does not recognize same-sex marriage.
Though same-sex Oregonians cannot legally marry in the state, they can chose to register as domestic partners, which gives them the tax and legal benefits of being married for Oregon purposes, but is not recognized by the federal government or Oregon as a marriage. It does not appear that the precedent set with Windsor applies to domestic partners, meaning that Oregonians in this position will receive the same benefits as if they were married for purposes of the Oregon estate tax, but not the federal estate tax. The question remains how the federal government will treat same sex couples who are legally married in one state, say Washington, and move to a state that does not recognize same sex marriage. Are they still married for federal purposes but not for the state they now domiciled, or does the new state’s position on same sex marriage invalidate the marriage for federal purposes?
In Oregon, if a same sex couple is married in Washington and moves to Oregon, the Washington marriage is not recognized by Oregon, but the couple can register as Domestic Partners. Does this registration and the fact that Oregon does not recognize same sex marriage terminate the marriage for federal purposes or does the couple receive the federal benefits because the marriage is valid in Washington and the couple received Oregon benefits because they are registered Domestic Partners? Hopefully this will be decided soon so our clients are not left wondering.
How the Estate Tax Brought Down the Defense of Marriage Act
Today the U.S. Supreme Court ruled that Section 3 of the Defense of Marriage Act (“DOMA”) violates the Equal Protection clause of the 5th Amendment to the U.S. Constitution. The opinion of the court in United States v. Windsor, written by Justice Kennedy, states that “DOMA seeks to injure the very class New York seeks to protect. By doing so it violates basic due process and equal protection principles applicable to the Federal Government.” The decision marks a historic moment in the national debate over same-sex marriage and will likely be the focus of much discourse. But there is one important issue that may otherwise fall through the cracks: this was a case about the federal estate tax.
Edith Windsor met her wife Thea Spyer in 1963 and the two became engaged four years later, never knowing whether they would legally be able to wed. They registered as domestic partners in 1993 in their home state of New York and were finally married in Toronto, Canada in 2007. Ms. Spyer passed away in 2009 and left her entire estate to Ms. Windsor. If Ms. Spyer had been a man, the entire bequest to Ms. Windsor would have passed tax free, under the marital deduction to the federal estate tax. However, when Ms. Windsor filed for the marital deduction, the Internal Revenue Service disallowed it, saying that under DOMA Ms. Windsor and Ms. Spyer were not in a recognized marriage and could not have the benefit of the marital deduction. The IRS assessed a $363,053 tax on Ms. Spyer’s estate, she paid the tax, and sued the government for a refund. Today, Edith Windsor not only gets the satisfaction of having her 44 year relationship finally recognized by the federal government, but she also gets a refund of the estate tax paid in 2009, plus interest.
Many questions remain that will be sorted out in the coming days, months (and probably years) – by the courts, Congress, and the Executive Branch. For couples in same-sex marriages (currently recognized by 12 states, and the District of Columbia) however, in addition to federal tax consequences, today’s ruling provides access to a significant number of federal law benefits. These benefits include Social Security survivor benefits, benefits under federal employee health plans, and veteran’s benefits.
Possible refund opportunity: Windsor v. United States
As many of our clients know, the United States Supreme Court is hearing two cases related to the federal Defense of Marriage Act (“DOMA”) next week. The high Court will hear oral arguments in Windsor v. United States on Wednesday, March 27, 2013. If the plaintiff, Edie Windsor, prevails, she will be entitled to a $363,000 refund (plus interest) of estate tax imposed on the estate of her spouse Thea Spyer, who died in 2009. Ms. Spyer’s estate incurred this tax expense because DOMA dictates that the one hundred percent spousal exemption under IRC section 2056(a) is unavailable to same sex couples.
The deadline to file individual income tax returns was on Wednesday, April 15 for 2009. Even if Ms. Windsor prevails and DOMA is ruled unconstitutional, we do not anticipate that the Court will issue an opinion before April 15, 2013, when the statute of limitations to file amended returns for tax year 2009 expires. Same sex couples who were legally married in 2009 under the laws of their state and would have been entitled to a tax refund in that year if they were eligible for the “married filing jointly” status, may consider filing a protective refund claim for that period. The IRS’s policy where there is ongoing litigation or the law is uncertain, is to collect the properly filed protective refund claims and either pay them or deny them when the law in the applicable area is settled. Even if Ms. Windsor does not prevail or if her case is dismissed on procedural grounds, such filings may eventually result in significant payments if DOMA is ultimately held unconstitutional. These refunds would be paid with interest calculated from the original due date of the return.
