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    Solutions: Federal Benefits for Married Same-Sex Couples

    Hundreds of federal benefits, rights, and obligations are now available to gay and lesbian couples who reside in Wisconsin but were wed in another jurisdiction, despite the fact that Wisconsin does not recognize same-sex marriage. Among recent changes, those related to filing federal and state taxes are effective with 2013 returns.

    Christopher S. Krimmer

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    wedding aisleMore than 14,890 same-sex couples resided in Wisconsin as of 2005.1 Many of these couples are now choosing to marry because a growing number of states recognize same-sex marriage and there are tangible rights associated with marriage. Attorneys who practice in family law, labor law, tax, Social Security, estate planning, and immigration, among other disciplines, must understand the interplay of these marriages with federal and state law.

    On June 26, 2013, the U.S. Supreme Court issued its decision in United States v. Windsor.2 In a 5-4 decision, the Court held that section 3 of the Defense of Marriage Act (DOMA) was unconstitutional on 10th amendment, due process, and equal protection grounds. Section 3 of DOMA prohibited the federal government from recognizing same-sex marriages even if a state should happen to sanction them. The majority opinion hints that DOMA violated the Constitution’s equal protection and due process rights of gay men and women, but it fails to articulate a clear analysis of either doctrine. As a result, the decision does not shed any more light on whether classifications based on sexual orientation invoke a heightened level of scrutiny or whether the right to marriage is a fundamental right being denied to all gay men and lesbians. These issues will need to be addressed in future cases.

    What we do know from the Windsor decision is that animus toward an unpopular group fails to survive even rational-basis review.3 Interestingly, the Court implicitly rejects the argument that barring gays and lesbians from marrying is based on an interest in protecting the traditional definition of marriage rather than on animus or discrimination. The majority seems to have taken a stance on the cultural debate on same-sex marriage and voted on the side of marriage equality.

    The implications of the Windsor decision are far reaching. With every passing week, the decision has further expanded the rights of gay and lesbian marriage partners. Gay and lesbian couples who married and live in one of the 15 states or the District of Columbia that recognize same-sex marriages will enjoy all the 1,138 federal benefits of marriage as well as all of the particular state’s marriage rights.4 These jurisdictions are California, Washington, Iowa, Minnesota, New York, Connecticut, Massachusetts, Vermont, New Hampshire, Rhode Island, Maine, Maryland, Delaware, Illinois, Hawaii, and the District of Columbia.

    Federal Bundle of Rights

    For the other 35 states, including Wisconsin, same-sex married couples will enjoy many federal benefits of marriage. Determining whether the couple will be entitled to a particular set of federal benefits turns on the distinction between the “place of residence” and “place of celebration” rules. To conceptualize the distinction, it is helpful to think of federal benefits, obligations, and rights divided among the various federal agencies, programs, and codes. Each federal agency or program offers spouses a “bundle of rights.” The Internal Revenue Service (IRS) offers certain spousal rights such as the unlimited marital deduction, the portability of the estate-tax exemption, health-savings-accounts tax benefits, and so on. The Social Security Administration (SSA) offers a different bundle of rights, such as the right of a spouse to receive benefits based on his or her spouse’s earnings. Whether a gay or lesbian married couple who live in Wisconsin will be able to access a bundle of federal benefits depends on whether that federal agency or program adopts the place of residence or place of celebration rule.

    Christopher S. Krimmercom christopher b-rlaw Christopher S. Krimmer, U.W. 1997, is a partner with Balisle & Roberson S.C., Madison, where he practices in family law.

    Place of Residence Rule. The place of residence rule states that if the marriage is valid in the state in which the spouses reside, then the federal agency will recognize the marriage as eligible for the benefits administered under that federal agency, program, or code. The Department of Veterans Affairs is an example of an agency that recognizes the place of residence rule. At the time of the publication of this article, the SSA follows the place of residence rule; however, SSA employees have been notified to accept applications for benefits from same-sex married couples, regardless of the state in which they reside, but to hold onto them until further guidance. For those agencies that follow the place of residence rule, gay and lesbian couples who live in Wisconsin will not be eligible for benefits under the purview of such agencies.

    Place of Celebration Rule. The place of celebration rule states that if the marriage is valid in the jurisdiction in which the marriage took place or was celebrated, then it is valid for purposes of eligibility for federal benefits even if the couple’s state of residence does not recognize the marriage as valid. Gay and lesbian couples who live in Wisconsin but married in one of the 15 states, the District of Columbia, or a country that recognizes same-sex marriage are thus eligible for the benefits, privileges, and obligations that arise from the federal agencies, programs, and codes that adopt this place of celebration rule. Federal agencies and programs that have always used the place of celebration rule are the Department of Defense, U.S. Citizenship and Immigration Services, and the Office of Personnel and Management.

    The distinction between place of residence and place of celebration rules existed long before legal issues regarding same-sex marriage arose. It had little effect and was rarely noticed because most opposite-sex marriages were valid in both the jurisdiction in which the marriage took place and the state of the parties’ residence.

    Federal Implementation of DOMA

    In response to the DOMA decision, and the disparate impact this place of residence versus place of celebration rule had on same-sex couples who married, President Obama created a task force consisting of the heads of the various federal agencies and programs and asked them to “swiftly and smoothly implement” the DOMA decision.5 What has transpired is more uniformity among the agencies with the adoption of the place of celebration rule. Federal agencies and programs that switched from place of residence to place of celebration, or at least clarified that they would follow the place of celebration rule, include the IRS and the Department of Labor. Many observers expect the SSA to make the switch in the coming months.

    Major Rights Available to Married Wisconsin Gay and Lesbian Couples

    The DOMA decision, combined with the federal agencies swiftly adopting the place of celebration rule, means that gay and lesbian couples in Wisconsin who legally married outside the state can receive many federal benefits immediately. Below is a brief overview of some of the major rights now available to Wisconsin gay and lesbian couples who are married.

    U.S. Citizenship and Immigration Services. Same-sex spouses can now sponsor a foreign national spouse for a visa and a green card. Same-sex spouses who are engaged can file for fiancé immigration status for the foreign national. A child or other relative of a same-sex married couple will have the same rights to petition for immigration statuses based on the couple’s same-sex marriage. Previous applications that were denied due to section 3 of DOMA can now be reopened.6

    Department of Defense. Spouses in a same-sex marriage can receive a larger housing allowance, Tricare (health-care) coverage, off-base housing, and a family-separation allowance.7

    Office of Personnel Management. A spouse of a same-sex federal civilian employee will be eligible to receive all the same benefits as does a spouse in an opposite-sex marriage, including health, vision, dental, retirement, and life insurance benefits. A spouse’s child will also be eligible for benefits based on the same-sex marriage of that child’s parent.8

    Department of Labor. Private retirement plans, health coverage, and family medical leave that are governed by ERISA and the Employee Benefits Security Administration are now available to same-sex spouses as plan participants. At last count, this means 701,000 retirement plans and 2.3 million health plans in the private sphere.9

    Internal Revenue Service. Same-sex marriages are now treated like any other marriage for federal tax purposes. This means that a spouse can inherit from a spouse and not owe estate tax, the spouses’ combined estate-tax exemption is portable between them, a spouse may contribute to an IRA even if the spouse is not working, health-savings-account tax benefits are available to both spouses and the children of the spouses, and same-sex couples may file joint tax returns. The IRS permits same-sex married couples to amend their tax returns for the past three years and receive any tax refund that would have been available had they been able to file joint returns for those years.10

    Obligations Arising from Same-Sex Marriage

    Some same-sex couples who married outside Wisconsin will undoubtedly be surprised not only by the benefits they now receive but also by the obligations that arise from their marriage. For example, the spouses now must file “married filing jointly” or “married filing separately” on their federal tax returns. This may or may not be a benefit to them depending on their incomes. They could, in fact, owe more in taxes if they are both high-income earners. Incidentally, the IRS will not require same-sex married couples to amend their past tax returns for the past three years if it would result in a larger tax obligation.11

    Another potential unintended consequence is that a spouse must sign a spousal waiver if anyone other than the spouse is listed as a beneficiary of an ERISA-controlled retirement plan. Estate-planning attorneys must make sure that the beneficiary designations of clients with same-sex spouses reflect the client’s wishes, by advising about the waiver when appropriate.

    Caution: Marriage-Evasion Statute

    It might seem evident that attorneys should encourage gay and lesbian clients to marry outside Wisconsin to receive these federal benefits, but a word of caution. Although never prosecuted against a same-sex couple, Wisconsin does have a marriage-evasion statute,12 which makes it a crime for a resident to leave Wisconsin to contract into a marriage that is prohibited under Wisconsin laws. Because Wisconsin has both a state statute that defines a marriage as between a “husband” and a “wife” and a constitutional amendment that prohibits recognition of same-sex marriages, the marriage-evasion statute theoretically could apply to these marriages.13 The penalties are severe: a fine of up to $10,000 and up to nine months’ imprisonment.14 The statute was enacted in the early 1900s when same-sex marriage was not even a remote possibility, but the language is broad and remains on the statute books. Whether the statute could withstand a constitutional challenge remains unclear in light of the Windsor decision that same-sex marriages deserve the same dignity as opposite-sex marriages.

    No State Benefits to Same-Sex Married Couples

    Although same-sex married couples will now receive many federal benefits even while living in Wisconsin, these couples will still be denied all benefits Wisconsin law provides to opposite-sex married couples. For example, although a same-sex married couple is now required to file joint federal tax returns, they must also file separate, individual state tax returns with the Wisconsin Department of Revenue, including a new Schedule S specific to same-sex married couples.15 Additionally, they will not be able to rely on a stepparent adoption if one spouse wishes to adopt the child of the other spouse. The marital presumption regarding a child born during the marriage does not apply to same-sex spouses. Finally, the Wisconsin Family Code, specifically laws on divorce, seems to not be available to same-sex couples if they should break up. The only way that these state rights will become available to same-sex married couples is if Wisconsin repeals Wisconsin Constitution article VIII, section 13 (the Marriage Amendment), by a referendum ballot, or by a court decision that the right to marry is a fundamental right under the U.S. Constitution that is being denied to same-sex couples.

    Endnotes

    1 Wisconsin: Census Snapshot. The Williams Institute (Dec. 2007).

    2 United States v. Windsor, 133 S. Ct. 2675 (2013).

    3 Id. at 2695.

    4 Office of the General Counsel, B-275860 (Jan. 31, 1997).

    5 White House Press Release (June 27, 2013).

    6 Statement from Secretary of Homeland Security Janet Napolitano on July 1, 2013.

    7 DOD Announces Same-Sex Spouse Benefits, News Release, Aug. 14, 2013.

    8 Benefits Administration Letter, No. 13-203, July 17, 2013.

    9 Guidance to Employee Benefit Plans on the Definition of “Spouse” and “Marriage” under ERISA and the Supreme Court’s Decision in United States v. Windsor. Technical Release No. 2013-04.

    10 Rev. Rul. 2013-17.

    11 Rev. Rul. 2013-17.

    12 Wis. Stat. § 765.04.

    13 Wis. Stat. § 765.01; Wis. Const. art. VIII, §13.

    14 Wis. Stat. §§ 765.04, 765.30.

    15 Tax Guidance for Individuals in Same-Sex Marriage, Wisconsin Department of Revenue (Sept. 6, 2013).




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