The Supreme Court’s landmark decision last month striking down the Defense of Marriage Act may have solved the estate tax problems of the lead plaintiff, Edith Windsor, but it still is leaving a lot of uncertainty among same-sex couples, particularly those in states that do not recognize same-sex marriage.
New York State, which does allow same-sex marriages, recently issued a short memorandum explaining the estate tax effects of the Supreme Court’s decision for New York taxpayers and how widowed spouses can claim tax refunds (see New York Offers Estate Tax Refund to Same-Sex Spouses). Jane Bernardini, CPA, a partner at the accounting firm Anchin Block & Anchin LLP in New York, sees that as a step forward, but like everyone else she can only speculate about what the IRS will ultimately do.
“New York has recognized same-sex marriages now for two years,” she pointed out in an interview Thursday. “For anybody who is married and their spouse has died in the last two years and they paid the estate tax, they can apply for a refund. Assuming we can do the same for the federal government, we’re just waiting for the guidance to come down from the IRS, which hasn’t come down yet. The IRS should be similar, but we’re not sure if it’s a three-year statute of limitations or if they’ll go back to the beginning of DOMA.”
DOMA passed in 1996, but since it’s unconstitutional nobody should have paid the estate tax if they were married, Bernardini pointed out. But the impact may be different in the various states that have legalized same-sex marriage, including New York, Massachusetts and Vermont.
“Each state will be different,” said Bernardini. “Right now three years is the norm for the statute of limitations. It’s three years from the date of filing and two years from the date of payment.”
Asked about her advice to clients, Bernardini said she is telling them to wait until the IRS issues its guidance for federal taxes.
“Until the federal regulations come out, I can’t really advise anything,” she said. “We’re waiting for the IRS to determine whether they will recognize the marriage where they reside or where the marriage took place. Somebody who’s residing in a state that doesn’t recognize marriage doesn’t have anything they can do.”