Recently the U.S. Department of Treasury and the Internal Revenue Service decided that they will determine the marital status of same-sex couples using what is known as the “state of celebration” rule. Under this rule, if a couple is legally married in a state that recognizes the marriage, the couple will be treated as legally married for federal tax purposes regardless of whether the couple actually resides in a state which recognizes same-sex marriage. This provides couples with assurance that moving to another state will not affect the status of their marriages. This decision also provides employers with much needed guidance regarding the treatment of same-sex couples for federal (though not state) tax purposes. Importantly, this decision does not impact the treatment of domestic partners in states which recognize such partnerships or civil unions, including Illinois.
Based on this decision, we recommend that employers review their retirement plans and gather information about employees who may now be treated as “married” for retirement purposes. Further, employers should review compensation and health care plans to ensure they define ‘marriage’ and ‘spouse’ appropriately. Notably, it is unclear how the state of celebration rule will affect the applicability of HIPAA and COBRA; as such, additional guidance from the federal government is expected.
Roberta (“Bobbie”) Holzwarth is the Chair of the firm’s Employment & Labor Group. Bobbie represents employers in various employment and labor matters, including: counseling in complex ADA, EEO, FMLA and other workplace matters, sexual harassment investigations and training, negotiation of collective bargaining agreements, preparation of employment and no-compete agreements, and the preparation and review of employee handbooks and personnel policies.