New York Gov. Andrew Cuomo has announced that the state will issue refunds to same-sex couples who file amended estate tax returns.
This week, referencing the Supreme Court decision last month in U.S. v Windsor, which deemed the Defense of Marriage Act, or DOMA, unconstitutional, Cuomo said that tax refunds would be issued to those taxpayers filing amended returns.
U.S. v. Windsor, which may forever be known going forward as “the DOMA case” originated in the Empire State. To refresh your memory, Edith “Edie” Windsor, a resident of New York, married Thea Spyer, her partner of 40 years, and that marriage was recognized by the state of New York. In New York, same-sex marriages were legal at Spyer’s death under the Marriage Equality Act, which was passed by the New York State Legislature and signed into law by Cuomo on June 24, 2011. However, since the federal government did not recognize the marriage as legal because of DOMA, Spyer’s estate was required to pay more than $600,000 in New York and federal estate taxes.
Windsor paid the tax and then sued to get it back (procedurally, this is the way that you’re supposed to do it). The case made its way to the Supreme Court. The Supreme Court ruled with a 5-4 majority that, “DOMA is unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment.”
Windsor is now due a tax refund of that $363,000 from the IRS – plus interest – for taxes that she paid due to her status as a “single” taxpayer and not as a married taxpayer. Now, she has the same valuation rights and tax breaks as a married taxpayer and accordingly, hopes to receive a sizable refund from the state as well.
No one knows for sure how many Edie Windsors are out there: New York has no idea how much it might actually refund to same-sex taxpayers in similar situations. Even though same-sex marriage has only been legal in the state for two years, for New York State estate tax purposes, the state has determined that equal tax treatment will be extended to estates of individuals married to same-sex spouses who died prior to July 24, 2011.
New York Commissioner of Taxation and Finance Thomas H. Matto has said about the matter, “Now, taxpayers affected by the Supreme Court decision may amend any previously filed estate tax return where the statute of limitations to apply for a refund remains open.” Generally, a claim for refund of estate tax must be filed by a taxpayer within three years from the date the original return was filed or two years from the date the tax was paid.
The IRS has yet to issue direction as to how it will treat previously filed tax returns for same-sex married couples. Their official statement on the matter to date was quite short:
We are reviewing the important June 26 Supreme Court decision on the Defense of Marriage Act. We will be working with the Department of Treasury and Department of Justice, and we will move swiftly to provide revised guidance in the near future.
