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How many States recognize only all-but-name same-sex marriage?


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Concerning the kinds of everything-but-the-name marriage that some States' laws provide, the Treasury department stated as its view for Federal tax purposes that marriage does not include a relationship that State law does not label as a marriage. That view seems to apply even if State law expressly provides that the relationship gets all the benefits, burdens, and other legal consequences of marriage.

I'm trying to size how big the exposures are if a 50+-States employer chooses to treat as not spouse those who have an everything-but-the-name status. Doing so might lead to challenges, legal and otherwise, from participants and beneficiaries. Likewise, I'm trying to size how big a fight such an employer takes on if it asserts, with Form 8275 disclosure, a tax position that an everything-but-the-name relationship that also is recognized under the law of the State in which the participant resides as providing all the legal consequences of marriage is a marriage for Federal tax purposes.

Although several States had an everything-but-the-name status, how many of those States still have such a status AND how many of those do not provide with-the-name same-sex marriage?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Good on 'ya if you can get someone to pay you for something that will provide extremely soft, speculative conclusions. I could understand if you were looking at what what would be required in each state with respect to specified circumstances. I think the analysis is pretty clear with respect to matters that are the province of the tax code and ERISA. For example, a registered domestic partner would not be successful in asserting a claim based on a failure of a pension plan to allow payment of a benefit a form other than a J&S annuity without the partner's consent. How would you evaluate the risk that some domestic partner would assert the claim? This is the United States. Anyone can sue for anything.

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Lou S., thank you for the helpful pointer. The color-coded map gives me a way to think about framing the issues and exposures, while I do the detailed research in States' statutes.

About ERISA section 205 provisions, as QDROphile observes, 'anyone can sue for anything'. (And the Labor department's Technical Release is not a rule or regulation to which a court must defer.) Smart fiduciaries understand that even a claim that ultimately doesn't win anything for its claimant might be just plausible enough that a fiduciary must incur attorneys' fees and other expenses to show that there is no claim. But many of those expenses can be avoided or at least lowered by administering a plan in a way that recognizes the potential claims and does so without harming a participant's legitimate interests.

I posed my query in this health plans forum because questions about whether an employer should pay over federal tax withholding on coverage that a health plan provides for an everything-but-the-name spouse remain difficult. An employer that wants to help its employees and has a taste for a fight might consider a (disclosed) tax-withholding position that doesn't follow Rev. Proc. 2013-17. An employer, in evaluating whether and how hard it wants to fight, might consider the numbers of employees affected and the amounts involved.

I have no fixed idea about what any plan fiduciary or employer ought to decide. I pull together information and analysis so that others can think about it.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Looks like you're down to 4 states to analyze: Oregon, Colorado, Nevada, and N. Mexico. Illinois now has a same sex marriage law, and Wisconsin has a state constitutional ban against it (not even close to all-but-name status).

Do the laws for domestic partnership or civil union in any of the 4 states read the same as the state's marriage law? (Just curious). Differences, even minor ones, create a distinction that could be important in court.

IMO, it feels like the word "marriage" itself is important in applying Windsor, since DOMA continues to say that states define "marriage."

As you say, it creates difficulties for plans covering employees in more than one state, and it could be a while before it all shakes out. It would help if states that want to recognize same-sex marriages would simply pass a law to do it.

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GMK, thank you for your further observations.

About your last observation, Colorado is an example: It has a statute and a State constitution provision that, if not contrary to the U.S. Constitution, purport to restrict marriage to opposite-sex marriage. But the statutes also provide a civil union. "A party to a civil union has the rights, benefits, protections, duties, obligations, responsibilities, and other incidents under law as are granted to or imposed upon spouses, whether those rights, benefits, protections, duties, obligations, responsibilities, and other incidents derive from statute, administrative or court rule, policy, common law, or any other source of law." Colorado Revised Statutes 14-15-107.

In other contexts, when a taxpayer argues for a favorable tax treatment by pointing to the form of a transaction, the Internal Revenue Service often argues substance over form. Could someone who is a party to a Colorado civil union but had taxes withheld on the value of the other party's health coverage argue that a word that describes a legal status must have the meaning that follows the legal consequences of that status?

After all, isn't that why law invents categories?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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I thought the Majority decision in Windsor made it clear that the Federal government determination of who is legally married depended on the state law and that only same sex couples who were recognized as married under state law would be considered married under all of the 1000+ federal laws. Couples who are recognized under civil unions or domestic partnerships are not legally married and not eligible for benefits or privileges (e.g. tax treatment ) under federal law. In fact same sex couples who are legally married under state law must file a joint return or married filing separately, not as single.

There is no basis for employees asserting discrimination under the 5th amendment (which was applied in the Windsor Case) because the employer does not provide tax benefits or spousal right to a pension benefit for same sex couples who are recognized as married in everything but the name if the denial is applied equally to both same sex and hetro sexual couples who have entered into the same legal relationships. Also there can be no 5th amendment claim by same sex couples who have entered into civil unions or domestic partnerships that their rights to rights to federal benefits are being violated under state law because the 5th amendment right of same sex couples to be deemed eligible for federal benefits if legally married under state law only applies to prohibit discrimination by the federal government. States are permitted to limit legal marriage to opposite sex couples.

mjb

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One thing to remember is that because the Treasury Department and Internal Revenue Service recognize marriages that are legal where performed (as opposed to where the couple lives), a couple in Colorado that has a civil union can go to any of the 15 (soon to be 16) states or the District of Columbia that allows same-sex marriage, or to any of the Indian tribal governments that does, and get married there. By so doing, the couple would secure numerous rights beyond those granted by an employer's plans. Under the circumstances, it would seem to me unlikely that a couple would undertake the expense of litigation in order to secure coverage under an employee health plan rather than just going to another state and getting married there. Litigation would be far more likely in the case of a retirement plan or retiree health plan, as the couple might need to prove a marriage for past years (rather than just a current marriage) in order to secure benefits.

Also, you have to think about what cause of action a couple could assert. Federal law does not require spousal coverage under a health plan (and will not, even when the Affordable Care Act is fully effective). And it does not contain any prohibition on discrimination based on sexual orientation. Thus, it is hard to think of a federal cause of action even if an employer simply said that it would not extend health benefits to same-sex spouses at all. Excluding "spouses in everything but name" should carry even less risk.

Some state laws do prohibit discrimination based on sexual orientation. (Obviously, an employer would have to be concerned about such laws only if it had operations in one of those states.) However, if the plan is covered by ERISA, there could be an issue as to whether ERISA preempts such laws as applied to employee benefit plans. In effect, the couple could not force the employer to cover them under the health plan, but would have to argue that the discrimination consisted in providing lower total compensation (counting wages plus benefits) than would have been provided to a similarly situated opposite-sex couple. And again, such an argument would be weakened if they have the option of securing benefits by getting married in another state.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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Carole:

I though the Op's question was about whether an employer could be sued under the Windsor decision by a same sex couple who live in a state that recognizes same sex relationships for all purposes as a married couple but calls it something than marriage (such as civil unions or domestic partnerships) because the employer includes the cost of the partner's heath insurance as taxable income. I don't think anyone disagrees that an employer can decline to offer spousal health insurance coverage under a group health plan but I don't think that under the Windsor decision an employer or employee can make a claim that health insurance for the domestic partner or civil union member must be excluded from the federal taxable income of the employee because the state law recognizes the relationship as being marriage for all purposes except in the legal definition under state law. If that were true then opposite sex couples who have entered into civil unions or DPs would also be considered to be married under state law even though they elected not to enter into a valid marriage which would make the state law distinction between marriage and DPs or civil unions meaningless..

mjb

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