Windsor Leads to Multiple Benefits for Same-Sex Married Couples Nationwide

The U.S. Department of Defense (DOD) announced Aug. 14 that it is making spousal and family military benefits available to same-sex married military members starting Sept. 3. Also, civilian personnel working for the military will get federal benefits for their same-sex spouses, themselves and their eligible family members.

While entitlements, like health insurance coverage, housing allowances and family separation allowances will' start being given to same-sex married military members and their spouses at least by Sept. 3, this will not be the first day of coverage. The DOD plans to pay these benefits retroactively, to the date of the Windsor decision, which was June 26, 2013. Any military member married to his or her same-sex spouse between June 26 and Sept. 3 will receive these benefits retroactive to the date of their marriage.

The federal government went even one step further to promote marriage equality ' or, it might be argued, inequality in favor of same-sex couples ' when it announced that any military member wishing to enter into a same-sex marriage who is currently stationed in a state or country that does not permit such unions may request leave to travel to a state or country that does, if such state or country is more than 100 miles from the duty location. He or she will be entitled to up to seven days of uncharged leave (if stationed stateside) or ten days of uncharged leave (if stationed overseas). “This will provide accelerated access to the full range of benefits offered to married military couples throughout the department, and help level the playing field between opposite-sex and same-sex couples seeking to be married,” the DOD stated in a release.

One thing not mentioned in the press releases announcing the new same-sex married partners' military benefits is divorce. Now that the federal government and its military branch are required to treat these couples as they would opposite-sex married couples, the Uniformed Services Former Spouses' Protection Act (USFSPA), 10 U.S.C. 1408, will apply.

The USFSPA has two main prongs. First, it gives state courts the power to distribute a portion of the military member's current or future retirement pay to a military spouse within the context of a divorce, separation or annulment proceeding. The state courts have discretion to work out the percentages awarded to each spouse.

Second, it creates a method for enforcing through the DOD retirement pay distribution orders issued in conjunction with family law proceedings. In order for the divorced spouse to collect his or her share of the military member's retirement pay through this mechanism, the parties must have been married for at least 10 years that overlapped with at least 10 years during which the member performed military service creditable toward retirement eligibility. This is known as the 10/10 rule.

The percentage of distribution attainable through this garnishment means is limited, however, to just 50% of the military member's disposable retirement pay (65%, if child support is also owed), even if the state court awarded the spouse a greater proportion. (Disposable retired pay is the retired pay minus allowable deductions. For a list of these deductions, see the Defense Finance and Accounting Service's explanation of “disposable retired pay” at http://bit.ly/181sJXw.)

Family lawyers should also be aware that, like their opposite-sex military family clients, same-sex divorced military spouses will only get a share of their ex-spouse's retirement pay cost of living adjustments (COLA) if the state court's award is expressed as a percentage of retirement pay. If the order states a fixed-dollar amount instead, COLA will not be given to the ex-spouse, even' if the court specifically orders COLA adjustments.

These and other federal policies and provisions will now be applicable to all married military members and their spouses, regardless of their gender. The only exception is the special allowance of uncharged leave for those needing to travel in order to marry a same-sex partner in a jurisdiction that allows such unions. And the 10/10 rule will not come up in practice until at least June 26, 2023 ' 10 years after the Windsor decision.

As always, when a divorcing client, or one seeking child support, annulment or legal separation, has a connection with the American military, inquiries should be made about the special laws and rules that apply.

Federal Taxes

The U.S. Treasury Department and the Internal Revenue Service (IRS) issued a release on Aug. 29 announcing that, that day, they had ruled that married same-sex couples are henceforth to be treated equally to their opposite-sex counterparts for federal tax purposes “including income and gift and estate taxes” and “all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.” See http://1.usa.gov/17UzbkZ. The ruling applies no matter where a couple lives, as long as their marriage was entered into in a place where such marriages are legally recognized. Those joined through civil union or registered domestic partner provisions will not, however, enjoy the benefits bestowed by the Aug. 29 ruling.

Those who are married by the end of this year must file a joint or married-filing-separately return for the 2013 tax years. In addition, those who want to file amended returns for past tax years that are not beyond the statute of limitations may do so. That means that if they file the amended claim within three years of filing their original tax return, or within two years of paying the tax (whichever is later), they may be entitled to a refund. Refund claims can thus be filed for tax years 2010, 2011 and 2012.

Taxes paid by same-sex spouses for the value of health care benefits offered through their spouses' employers are also refundable. “Additionally,” states the Aug. 29 release, “employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.”

Estate taxes for the non-wealthy, like those at issue in Windsor, will not be collected from a same-sex spouse who takes from her deceased spouse.

Gift taxes, which are usually owed if one gives a gift worth more than $14,000 in a tax year, will not be applied to same-sex married parties who gift to each other. If gift taxes were paid in the past, a refund may be available if the statute of limitations for seeking a refund has not yet run.

Form 1040X (Amended U.S. Individual Income Tax Return) should be filed for income tax refund claims, while those seeking return of gift or estate taxes should file Form 843 (Claim for Refund and Request for Abatement).

Veterans' Benefits

On Sept. 4, U.S. Attorney General Eric Holder sent a letter to Speaker of the House John Boehner informing him and Congress that, going forward, all marriage-based veterans' benefits will be provided to lawfully married couples, no matter whether these couples are opposite-sex or same-sex. These benefits include survivor benefits, disability benefits, and entitlement of a spouse to be buried in a veteran's cemetery with the veteran spouse.

Same-sex married veterans were not given veteran's benefits previously because the statute dealing with those benefits defines the terms “surviving spouse” and “spouse” (in 38 U.S.C. ” 101(3) and 101(31), respectively), as a person of the opposite sex' who is or was married to the veteran through whom benefits are sought. The definitions in Title 38 are separate and independent of DOMA's definition of “spouse,” so that the holdings in Windsor ' which dealt only with the constitutionality of DOMA ' did not directly bear on their constitutional recognition.

Nevertheless, Holder's letter made clear that the Supreme Court's Windsor rulings were at the heart of the change in policy, as the definitions in both statutes are substantially the same, and the Supreme Court has declared the DOMA definition of “spouse” unconstitutional under the Fifth Amendment. The Attorney General cited also to the letter he sent to Congress in February 2012 expressing his and President Obama's conclusions that Title 38's classifications were unconstitutional. Because of this, he informed Congress a that time that the justice department would no longer attempt to defend these provisions against judicial attack, yet said the executive branch would uphold the law until such time as it was judicially declared invalid.

And, finally, he discussed the very recent decision in Cooper-Harris v. United States, No. 2:12-00887-CBM (C.D. Cal. Aug. 29, 2013), in which a U.S. District Court concluded that the definitions in Title 38 that exclude same-sex married partners from receiving veteran's benefits are contrary to the protections of the Fifth Amendment to the Constitution. With the Cooper-Harris decision now in place, the Windsor decision mirroring it (despite it's not being directly on point), and Congress's own Bipartisan Legal Advisory Group's (BLAG's) withdrawal from the defense of the Title 38 provisions following Windsor, the latest Holder letter explained that the Executive Branch must now discontinue its enforcement of the restrictions imposed by the Title 38 provisions. “[C]ontinued enforcement would likely have a tangible adverse effect on the families of veterans and, in some circumstances, active-duty service members and reservists, with respect to survival, health care, home loan, and other benefits,” Holder explained.

Conclusion

As many speculated would happen, the U.S. Supreme Court's Windsor decision is changing the way the federal government conducts business, even in ways not directly addressed by the Court. In less than a month's time, the three major policy announcements discussed here have begun to whittle away at the list of laws and regulations that were once applied only to opposite-sex married people. We can expect more of the same in the coming months.

Janice G. Inman is Editor-in-Chief' of this newsletter.

When the U.S. Supreme Court ruled earlier this year, in Windsor v. U.S., that Section 3 of the Defense of Marriage Act ' which states that no matter whether any state permits same-sex couples to marry, the United States cannot recognize that marriage as valid ' is unconstitutional as applied to couples who are legally married in a state that sanctions same-sex marriage, questions arose from many quarters. Would federal government agencies apply their policies differently, depending on whether a same-sex couple resided in Oklahoma (where same-sex marriage is not recognized) or in New York (where it is)? What if the couple were married while living in a state that sanctions their union, yet later moved to one that didn't, or vice versa?

The answers are now coming, in a piecemeal manner, as the federal government announces to agency after agency that they must treat same-sex married couples as they do opposite-sex married couples. And it makes very little difference what a couple's home state says: The federal government apparently intends to recognize their marriages, even if their state will not.

Military Benefits

The U.S. Department of Defense (DOD) announced Aug. 14 that it is making spousal and family military benefits available to same-sex married military members starting Sept. 3. Also, civilian personnel working for the military will get federal benefits for their same-sex spouses, themselves and their eligible family members.

While entitlements, like health insurance coverage, housing allowances and family separation allowances will' start being given to same-sex married military members and their spouses at least by Sept. 3, this will not be the first day of coverage. The DOD plans to pay these benefits retroactively, to the date of the Windsor decision, which was June 26, 2013. Any military member married to his or her same-sex spouse between June 26 and Sept. 3 will receive these benefits retroactive to the date of their marriage.

The federal government went even one step further to promote marriage equality ' or, it might be argued, inequality in favor of same-sex couples ' when it announced that any military member wishing to enter into a same-sex marriage who is currently stationed in a state or country that does not permit such unions may request leave to travel to a state or country that does, if such state or country is more than 100 miles from the duty location. He or she will be entitled to up to seven days of uncharged leave (if stationed stateside) or ten days of uncharged leave (if stationed overseas). “This will provide accelerated access to the full range of benefits offered to married military couples throughout the department, and help level the playing field between opposite-sex and same-sex couples seeking to be married,” the DOD stated in a release.

One thing not mentioned in the press releases announcing the new same-sex married partners' military benefits is divorce. Now that the federal government and its military branch are required to treat these couples as they would opposite-sex married couples, the Uniformed Services Former Spouses' Protection Act (USFSPA), 10 U.S.C. 1408, will apply.

The USFSPA has two main prongs. First, it gives state courts the power to distribute a portion of the military member's current or future retirement pay to a military spouse within the context of a divorce, separation or annulment proceeding. The state courts have discretion to work out the percentages awarded to each spouse.

Second, it creates a method for enforcing through the DOD retirement pay distribution orders issued in conjunction with family law proceedings. In order for the divorced spouse to collect his or her share of the military member's retirement pay through this mechanism, the parties must have been married for at least 10 years that overlapped with at least 10 years during which the member performed military service creditable toward retirement eligibility. This is known as the 10/10 rule.

The percentage of distribution attainable through this garnishment means is limited, however, to just 50% of the military member's disposable retirement pay (65%, if child support is also owed), even if the state court awarded the spouse a greater proportion. (Disposable retired pay is the retired pay minus allowable deductions. For a list of these deductions, see the Defense Finance and Accounting Service's explanation of “disposable retired pay” at http://bit.ly/181sJXw.)

Family lawyers should also be aware that, like their opposite-sex military family clients, same-sex divorced military spouses will only get a share of their ex-spouse's retirement pay cost of living adjustments (COLA) if the state court's award is expressed as a percentage of retirement pay. If the order states a fixed-dollar amount instead, COLA will not be given to the ex-spouse, even' if the court specifically orders COLA adjustments.

These and other federal policies and provisions will now be applicable to all married military members and their spouses, regardless of their gender. The only exception is the special allowance of uncharged leave for those needing to travel in order to marry a same-sex partner in a jurisdiction that allows such unions. And the 10/10 rule will not come up in practice until at least June 26, 2023 ' 10 years after the Windsor decision.

As always, when a divorcing client, or one seeking child support, annulment or legal separation, has a connection with the American military, inquiries should be made about the special laws and rules that apply.

Federal Taxes

The U.S. Treasury Department and the Internal Revenue Service (IRS) issued a release on Aug. 29 announcing that, that day, they had ruled that married same-sex couples are henceforth to be treated equally to their opposite-sex counterparts for federal tax purposes “including income and gift and estate taxes” and “all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.” See http://1.usa.gov/17UzbkZ. The ruling applies no matter where a couple lives, as long as their marriage was entered into in a place where such marriages are legally recognized. Those joined through civil union or registered domestic partner provisions will not, however, enjoy the benefits bestowed by the Aug. 29 ruling.

Those who are married by the end of this year must file a joint or married-filing-separately return for the 2013 tax years. In addition, those who want to file amended returns for past tax years that are not beyond the statute of limitations may do so. That means that if they file the amended claim within three years of filing their original tax return, or within two years of paying the tax (whichever is later), they may be entitled to a refund. Refund claims can thus be filed for tax years 2010, 2011 and 2012.

Taxes paid by same-sex spouses for the value of health care benefits offered through their spouses' employers are also refundable. “Additionally,” states the Aug. 29 release, “employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.”

Estate taxes for the non-wealthy, like those at issue in Windsor, will not be collected from a same-sex spouse who takes from her deceased spouse.

Gift taxes, which are usually owed if one gives a gift worth more than $14,000 in a tax year, will not be applied to same-sex married parties who gift to each other. If gift taxes were paid in the past, a refund may be available if the statute of limitations for seeking a refund has not yet run.

Form 1040X (Amended U.S. Individual Income Tax Return) should be filed for income tax refund claims, while those seeking return of gift or estate taxes should file Form 843 (Claim for Refund and Request for Abatement).

Veterans' Benefits

On Sept. 4, U.S. Attorney General Eric Holder sent a letter to Speaker of the House John Boehner informing him and Congress that, going forward, all marriage-based veterans' benefits will be provided to lawfully married couples, no matter whether these couples are opposite-sex or same-sex. These benefits include survivor benefits, disability benefits, and entitlement of a spouse to be buried in a veteran's cemetery with the veteran spouse.

Same-sex married veterans were not given veteran's benefits previously because the statute dealing with those benefits defines the terms “surviving spouse” and “spouse” (in 38 U.S.C. ” 101(3) and 101(31), respectively), as a person of the opposite sex' who is or was married to the veteran through whom benefits are sought. The definitions in Title 38 are separate and independent of DOMA's definition of “spouse,” so that the holdings in Windsor ' which dealt only with the constitutionality of DOMA ' did not directly bear on their constitutional recognition.

Nevertheless, Holder's letter made clear that the Supreme Court's Windsor rulings were at the heart of the change in policy, as the definitions in both statutes are substantially the same, and the Supreme Court has declared the DOMA definition of “spouse” unconstitutional under the Fifth Amendment. The Attorney General cited also to the letter he sent to Congress in February 2012 expressing his and President Obama's conclusions that Title 38's classifications were unconstitutional. Because of this, he informed Congress a that time that the justice department would no longer attempt to defend these provisions against judicial attack, yet said the executive branch would uphold the law until such time as it was judicially declared invalid.

And, finally, he discussed the very recent decision in Cooper-Harris v. United States, No. 2:12-00887-CBM (C.D. Cal. Aug. 29, 2013), in which a U.S. District Court concluded that the definitions in Title 38 that exclude same-sex married partners from receiving veteran's benefits are contrary to the protections of the Fifth Amendment to the Constitution. With the Cooper-Harris decision now in place, the Windsor decision mirroring it (despite it's not being directly on point), and Congress's own Bipartisan Legal Advisory Group's (BLAG's) withdrawal from the defense of the Title 38 provisions following Windsor, the latest Holder letter explained that the Executive Branch must now discontinue its enforcement of the restrictions imposed by the Title 38 provisions. “[C]ontinued enforcement would likely have a tangible adverse effect on the families of veterans and, in some circumstances, active-duty service members and reservists, with respect to survival, health care, home loan, and other benefits,” Holder explained.

Conclusion

As many speculated would happen, the U.S. Supreme Court's Windsor decision is changing the way the federal government conducts business, even in ways not directly addressed by the Court. In less than a month's time, the three major policy announcements discussed here have begun to whittle away at the list of laws and regulations that were once applied only to opposite-sex married people. We can expect more of the same in the coming months.

Janice G. Inman is Editor-in-Chief' of this newsletter.