In a landmark decision, the United States Supreme Court held today that the Defense of Marriage Act (“DOMA”) is unconstitutional because it violates the Due Process Clause of the Fifth Amendment. (U.S. v. Windsor.) DOMA is a 1996 federal statute which provides that only marriages between a man and a woman are recognized under federal law.
The death of DOMA is a game-changer for same-sex couples, attorneys, accountants, real estate professionals, commercial banks, the Internal Revenue Service, the Social Security Administration, state and federal judges, etc. The statute’s repeal by the Supreme Court will have sweeping effects on an enormous patchwork of federal laws, most notably the Internal Revenue Code and the Bankruptcy Code.
Below is a list of the top five adverse effects DOMA had on same-sex couples under tax and bankruptcy law:
1. DOMA prohibited same-sex couples from filing a joint tax return, denying them Alternative Minimum Tax exemption amounts afforded to opposite-sex couples, affecting their eligibility to receive the Earned Income Tax Credit as well as increased standard deduction amounts, and literally hundreds of other tax benefits reserved for joint filers.
2. Same-sex couples were not permitted to transfer property between spouses without incurring tax liability.
3. Same-sex couples could not devise or bequeath assets to their spouse under a will or trust without imposing substantial tax burdens on the surviving spouse.
4. Gay and lesbian couples could not file a joint bankruptcy petition, thereby increasing the costs and complexity of their bankruptcy.
5. A deceased spouse’s ERISSA-qualified retirement account would not roll over to the surviving spouse without first being taxed, often at significant rates.
These legal detriments – and about 995 others – were eliminated today by the Supreme Court’s historic decision.
The Law Offices of Todd Lezon 