The Deparment of Justice officially has taken the position that the federal Defense of Marriage Act (DOMA) violates equal protection guarantees under the Fifth Amendment. As set forth in a letter to Congress from Attorney General Eric Holder, which reportedly reflects the President’s own thinking on the subject, the Administration no longer supports the reasoning and arguments formerly used to uphold DOMA. The DOMA was enacted under President Clinton in 1996 (before “L’Affaire Lewinsky,” for those who are counting.) The DOMA defines a legal spouse, for federal law purposes, only as a lawfully married member of the opposite sex.

As a result of DOMA, registered domestic partners do not have the same status and rights as opposite sex spouses under ERISA retirement and health plans, under federal estate tax laws, and in a variety of other legal settings. As a simple example, a surviving registered domestic partner does not have the same ability as an opposite sex surviving spouse to treat an IRA inherited from a decedent spouse as the surviving partner’s own account, which greatly increases the stretch-out distribution capability of the account. This “spousal election” right remains limited to opposite sex spouses. Although the tax laws recently changed to allow non-spouse beneficiaries (including domestic partners) the ability to roll over amounts from an inherited IRA, the rollover right simply does not permit the same stretchout options as does the spousal election.

In California, registered domestic partners (as defined by Section 297 et seq. of the California Family Code) do have the same legal status and rights as opposite sex spouses for all purposes under California law. This means that benefits such as group health insurance that an employee provides to his or her registered domestic partner are treated at the state tax level just as are any other benefits provided to a dependent, and do not result in imputed California income to the employee. However unless the domestic partner meets the federal definition of a dependent (as set forth in IRC Section 152), provision of benefits to him or her will cause the employee to experience imputed income at the federal level. It is rare for a domestic partner to meet the dependency test under Section 152 as it requires they receive more than half of their financial support from the employee partner, and with regard to non-health benefit plans also imposes a cap on compensation that is extremely low.

Employers in states like California have long been burdened with the process of tracking and assigning a value to benefits provided to domestic partners, for federal tax compliance. Now, in a whipsaw effect, they are required to do just the opposite (track imputed state income) with regard to group health benefits provided to dependent children up to age 26, as a result of expanded coverage to this group under PPACA. Fortunately California likely will bring its tax laws into conformity with PPACA in the near future, as AB 36 wends its way through Sacramento.

The path to repeal of DOMA likely will be longer and more fraught with controversy because of the “hot button” nature of the issue at the national level. However, there have been less direct attempts to address the problem nationally in the past. The “Tax Equity for Domestic Partners and Health Plan Beneficiaries Act” was introduced in Congress by Republican Senator Gordon Smith of Oregon, but never moved past the committee level. It is possible that as DOMA is reexamined in coming months, even factions that disagree on the moral/religious issues can reach agreement that parity in tax treatment between spouses and domestic partners is warranted at the federal level. I will continue to track this issue as it develops.


  1. Another way that the recognition or non-recognition of a same-sex marriage could matter relates to who gets a retirement plan’s benefit after the participant’s death. Cozen O’Connor v. Tobits and Farley, which now is proceeding in the Federal court for the Eastern District of Pennsylvania, might (if fully litigated) provide some guidance.

    According to the plan administrator’s interpleader about a retirement plan’s death benefit, there is a dispute between the decedent’s spouse and parents. The parents say that the participant, one day before her death, made a designation naming them beneficiaries. But if the decedent’s same-sex spouse is the surviving spouse, she is entitled to at least 50% and, if the proffered beneficiary designation was not the participant’s valid act, the entire death benefit.

    If the proffered beneficiary designation was not the participant’s act, both operative plan provisions – the 50% qualified preretirement survivor annuity and the default beneficiary – turn on a law issue: was Sarah’s same-sex spouse her spouse within the retirement plan’s meaning? That question could involve considering whether 1 U.S.C. § 7 is contrary to the United States Constitution.

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