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IRS defines spouse under tax law

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On June 16th the IRS issued an information letter to Mr Eugene Delgaudio in which it confirmed that under the Defense of Marriage Act the term spouse for the purpose of administering federal law, including the tax law, is defined as a person of the opposite sex who is a husband or wife. According to the IRS DOMA applies even if the state recognizes the union of two persons of the same sex as a legal marriage.

While the IRS letter answered the question of eligibility to file a joint tax return, the definition of spouse under DOMA will apply to those provisions of the IRC affecting benefits such as QDROs, contributions to a spouse's IRA, spousal rollovers, payments from an FSA and exclusion of health insurance premiums from income taxation. This means that a QDRO cannot be issued for benefits under an ERISA plan if the marriage is between members of the same sex legally married in Mass or Canada. While spousal death benefits will not be required for plans subject to ERISA (e.g., J & S annuity), there is no prohibition against an employer providing such benefits for same sex couples under a qualified plan subject to ERISA provided the applicable nondiscrimination rules are complied with. (Note: the value of the survivor benefits will be considered a taxable gift of the employee or a taxable transfer by the employee under the federal estate tax.)


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