DOMA Ruling Creates Opportunities, Problems for Small Businesses

When the U.S. Supreme Court struck down the federal Defense of Marriage Act (DOMA) on June 26, it kicked off a Gay Pride week celebration like no other. A few months later, however, reality is setting in for same-sex couples and small business owners who are realizing that the ruling creates both opportunities and potential problems.

Brendon Pack, a vice president at 1800Accountant.com says that since DOMA was struck down, the company has had a number of inquiries from its clients. “We have had quite a few inquiries regarding amending previous year’s tax returns in light of the DOMA ruling. We expect this will turn into an avalanche as we get closer to tax season and people are provided more context around the ruling and its practical applications.”

Calling a tax consultant for advice on taxes that will be affected by DOMA is the right move, since every taxpayer’s individual situation will change how the court’s decision affects them, but it may be months before all of the rules, regulations, and implications of the ruling are clear.

Gary Milkwick, CPA and Vice president at 1800Accountant.com adds, “We have been doing tax returns for same sex couples for many years, so this ruling has a huge effect on these clients. In states where same-sex marriages are performed, we are receiving questions about whether clients should amend past tax returns going back to the year in which they were married. We’re also getting a lot of questions about estate-planning issues since it is no longer clear whether the special trusts which were often set up to protect same-sex families will be more or less beneficial in terms of taxes than the laws which previously did not apply to same-sex married couples.

“Last, but hardly least, many of our same-sex clients are rightly concerned about the impact that the marriage penalty may have on their taxes. Many of our small business clients who offer benefit plans to employees are also wondering how the DOMA ruling will affect those benefit plans. Sorting it all out and finding the best path can be confusing without help from a tax advisor who is on top of the rapid changes this ruling is creating.”

In July, a federal judge in Pennsylvania ruled that the ERISA-qualified benefits plan for employees of a private company based in Pennsylvania must be interpreted to include coverage for the same-sex wife of a woman who had worked for the company prior to her death.

It’s the first court ruling since the U.S. Supreme Court struck down the Federal Defense of Marriage Act (DOMA) that has ordered a private company in a state that does not recognize same-sex marriages to provide benefits to a same-sex spouse. The result has been a spate of calls from small business owners to their legal, insurance, and tax advisors concerned about what the judge’s ruling means for their benefits plan.

 Where to Get Answers

Logoworks partner 1800Accountant.com has published a new white paper that summarizes what is known about how the DOMA ruling will affect taxes for:

  • Same-sex married couples
  • Same-sex unmarried couples considering taxes as part of the decision whether to marry
  • Business owners considering the ruling’s implication on their benefits plan
  • Families considering the inheritance issues relating to a transfer of property when one or more of the property owners or beneficiaries is a partner in a same-sex marriage

The white paper, titled The Tax Fallout from DOMA: What the SCOTUS Decision Means for Businesses, Employers, and Same-Sex Couples, is now available for free download from the Resources page of the 1800Accountant.com website. “The white paper is as comprehensive as it can be in the current climate of uncertainty, but it is not the final word and will be updated as new information becomes available,” Milkwick said. “It’s a starting point, but individual and business taxpayers need to discuss specifics with their own tax advisor before making decisions.”

The Tax Fallout from DOMA: What the SCOTUS Decision Means for Businesses, Employers, and Same-Sex Couples includes sections on:

·Joint Returns for Same-Sex Couples: Will taxes go up – or down?

·Changing Estate Planning Strategies

·Impact on Business Owners & Employer Benefit Plans

·Conclusion: Some Benefit, Others Don’t

 

To schedule a free consultation with 1800Accountant, please click here

 

 

Photo Credit: This photograph of the frieze decorating the front of the U.S. Supreme Court was offered under a Creative Commons license