As you probably all know by now, the Second Circuit has joined the First Circuit in ruling that DOMA (the Defense of Marriage Act) is unconstitutional. The Second Circuit case is Windsor v. United States and it challenges DOMA as applied to the marital deduction for estate tax purposes. In my view, there is no rational reason why opposite sex surviving spouses should be allowed to continue the pre-death of spouse standard of living estate tax free while a same-sex spouse will have to reduce standard of living to the extent there is a significant estate tax bill. But the case raises additional issues.


Edie and Thea were in a long-term committed relationship. Two year’s before Thea’s death they went to Canada and married.  It seemed the right thing to do after so many years together. Canadian same-sex marriages were legal then. So were same-sex marriages in Massachusetts. Thea died in February of 2009 so the marriage would have been recognized in Connecticut as well.


But this case has focused on the fact that Edie and Thea lived in New York. As a result the legal question that has captured much of the judicial attention is whether or not New York would have recognized the marriage. Both the district court and the court of appeals concluded that New York would have recognized the marriage. And while the highest court in New York, the Court of Appeals, had never ruled on that specific question there were a number of lower courts that had. All decisions concluded that as to the issue raised, the marriage should be recognized. However, the New York State Department of Taxation and Finance had concluded that even if same sex marriages were recognized for other purposes they could not be recognized for state income tax purposes. No one ever challenged that determination so it is unclear whether it would have withstood judicial scrutiny. And the Department never ruled publicly on whether or not the marriage would be recognized for purposes of New York’s separate estate tax.


This question about the validity of Edie and Thea’s marriage under New York state law troubles me. I think the fact that it was valid under Canadian law, Massachusetts law, and Connecticut law is sufficient. Why? Because when you are validly married in one jurisdiction, it matters. Even if you live in Georgia, a state that has an over the top state constitutional amendment on recognition of same sex marriage, you are still married in a number of US jurisdictions and many foreign countries. You are not free to ignore that valid marriage just because you are domiciled (perhaps temporarily) in a state that does not recognize it.  And so for federal tax purposes, you should be considered married.


One reason I think we need to think about this point is that once DOMA falls (and I believe it will) we will need to consider who is married for tax purposes. The supporters of DOMA argue that the IRS needs DOMA to protect it from having to determine who is married and who is not since state laws differ so much. But this problem would not be a problem if the IRS adopted the place of celebration rule. Under this rule, if a couple is married in a jurisdiction that recognizes their marriage then they are married in the eyes of the IRS. And the IRS should adopt such a rule because it makes sense. Your federal tax law status should not change as you cross state lines. And if you are really married, in even one state, then you are married in a way that has consequences. Think about it. Your spouse could move from Georgia to a marriage recognition state and institute divorce proceedings that would recognize the marriage. You would not be free to marry someone else until you dissolved the current marriage because even if Georgia didn’t recognize the current marriage there are other states that do.


I understand why the litigators are arguing that law of the domicile counts. Every DOMA challenge that is in federal court right now involves couples legally married in the state in which they currently reside. Those are the best test cases. But if we end up winning any of these, the next battleground will be: if you are married in Massachusetts but have moved to Georgia are you still married for purposes of federal law? I think the right answer is “yes.”