On August 31, 2016, the IRS issued final regulations that amend existing regulations under the Internal Revenue Code (Code) to provide that, for federal tax purposes:

The regulations, which reflect the Supreme Court's same-sex marriage rulings in Windsor and Obergefell, finalize proposed regulations issued by the IRS last fall (see Legal Update, IRS Proposed Rules Would Include Same-Sex Spouses in Terms Related to Marital Status). As background, the Court held in Windsor that Section 3 of the Defense of Marriage Act (DOMA), which defined the terms "spouse" and "marriage" for purposes of federal law (including the Code) as being solely between one man and one woman, was unconstitutional. In Obergefell, the Court held that:

(Regarding these Supreme Court rulings, see Legal Updates, Supreme Court: DOMA Section 3 Is Unconstitutional and Proposition 8 Proponents Lack Standing and Supreme Court's Recognition of Same-Sex Marriage Raises Benefits and Employment Law Issues.)

The final regulations, which are effective September 2, 2016, generally reflect that after Windsor and Obergefell:

Under a change from the proposed regulations, the final regulations now include:

As amended, the final regulations provide that a marriage of two individuals is recognized for federal tax purposes if it is recognized by the US state, possession, or territory in which it is entered into, regardless of domicile (26 C.F.R. § 301.7701-18(b)(1)).

Under the newly added rule for foreign marriages, two individuals who enter into a relationship that is "denominated as marriage" under the laws of a foreign jurisdiction are recognized as married for federal tax purposes:

According to the IRS, this rule allows couples who are married outside the US to determine their marital status for federal tax purposes regardless of:

In the preamble to the final regulations, the IRS addressed a commenter's observation that some states that recognize common-law marriage only do so regarding opposite-sex couples. The IRS declined to add a clarification that common-law marriages of same-sex couples will be recognized. Rather, the IRS's position is that the final regulations' provisions on marital status for federal tax purposes address marital status regardless of whether the marriage is a common-law or civil marriage.

Under the final regulations, the terms "spouse," "husband," and "wife" do not include individuals in a registered domestic partnership, civil union, or other similar relationship that is not a marriage under the laws of the US state, possession, or territory where it was entered into, regardless of domicile (26 C.F.R. § 301.7701-18(c); see also Practice Note, Domestic Partner Health Benefits). Similar rules apply regarding the terms "husband and wife" and "marriage." In the preamble, the IRS reiterated its view that the final regulations should not treat registered domestic partnerships, civil unions, and other similar relationships (if entered into in states that distinguish these relationships from marriages) as marriages for federal tax purposes.

The IRS reasoned that:

In addition, the IRS noted that its position is consistent with the only federal district court that has addressed the question of whether registered domestic spouses are spouses for Code purposes (Dragovich v. U.S. Dep't of Treasury, (N.D. Cal. Dec. 4, 2014)).

After Windsor, the IRS issued Revenue Ruling 2013-17, which provided that for federal income tax purposes the IRS would recognize a same-sex marriage that was valid in the state where it was entered into regardless of the married couple's place of domicile (see Legal Update, IRS Adopts Same-sex Marriage Recognition Rule). The IRS also issued a series of Windsor-related guidance after Revenue Ruling 2013-17, including IRS Notices 2013-61, 2014-1, 2014-19, 2014-37 and 2015-86.

For more information on this guidance, see:

The final regulations render Revenue Ruling 2013-17 obsolete as of September 2, 2016. However, Notices 2013-61, 2014-1, 2014-19, 2014-37, and 2015-86 may continue to be relied on regarding the application of Revenue Ruling 2013-17 to benefit plans, to the extent these notices are not changed, superseded, obsoleted, or clarified by future guidance.

For additional resources to assist retirement plans in complying with the Court's same-sex marriage rulings and related implementing guidance, see Same-Sex Marriage Developments for Retirement Plans Toolkit.

As reflected in the preamble to the final regulations, the main issue on which commenters on the proposed regulations disagreed was the treatment, for federal tax purposes, of registered domestic partners and similar relationships. In the end, the IRS declined for the most part to change its position regarding domestic partnerships and similar relationships. As a result, employers that may still be considering whether to eliminate benefits for unmarried domestic partners (now that same-sex marriage is legal in all 50 states, after Obergefell) at least have a more settled view of how those benefits will be treated for federal tax law (see Article, Expert Q&A on Same-Sex Partner Benefits After the US Supreme Court's Obergefell Decision).