Dec 19

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Same-Sex Couples Should File Protective Refund Tax Claims

On December 7, the Supreme Court granted certiorari in the case United States vs. Windsor. In the case, both the trial court in the Southern District of New York, and the Second Circuit found that Section 3 of the Defense of Marriage Act (DOMA) unconstitutional, as it defines the term marriage as “a legal union between one man and one woman as husband and wife” and spouse as “a person of the opposite sex who is a husband or a wife”.

If DOMA is found unconstitutional, same-sex married couples would be able to filing joint tax returns, which usually reduces one’s income taxes. Similarly, same sex married couples would also be allowed an unlimited marital deduction for gift and estate taxes. Additionally, these couples would be able to amend prior-year tax returns to claim Married status.

Amended returns must be filed by the later of three years from filing your return, or two years of paying the tax. Same sex married couples should consider filing a “Protective Claim for Refund.” This keeps the tax issue open for a potential refund while the issue is resolved by the Supreme Court. To file a protective claim, file a amended return, and disclose that this is a protective claim based on Windsor vs. United States. The claim would be held until the matter is finalized in the courts.

Several states allow same-sex couples to register as domestic partnerships or civil unions. There are arguments that these couples would also be considered married if DOMA fails. Accordingly, these couples should also consider filing protective refunds claims.

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

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