October 31, 2012
Janis Cowhey, Tax & Business Services Partner, Quoted in New York Times' Bucks Blog "Gay Couples May Want to File a Protective Tax Refund Claim"
By Ann Carrns
The recent decision by a federal appeals court regarding the Defense of Marriage Act suggests gay couples may want to file something known as a protective refund claim with the Internal Revenue Service in the event the Supreme Court overturns the law, according to accounting experts.
The Court of Appeals for the Second Circuit in New York struck down the law’s definition of marriage as a union between a man and a woman as unconstitutional. The decision was the second by a federal appeals court striking down DOMA, as the law is known. The law’s constitutionality is expected eventually to be considered by the United States Supreme Court.
If the high court invalidates DOMA, legally married same-sex couples will be able to file claims for refunds of federal tax overpayments, said Janis Cowhey McDonagh, a partner at Marcum LLP in New York and a specialist in the firm’s national LGBT and non-traditional family practice.
Ms. McDonagh said couples should file a protective refund claim now because there is a three-year statute of limitations on tax refund claims. By filing a claim now, couples will have standing for overpayments dating to 2009, while DOMA wends its way through the court system. The claim applies to income taxes, estate taxes as well as gift taxes, she said.
It’s possible, Ms. McDonagh said, that if the Supreme Court voids the law, the I.R.S. could waive the three-year statute of limitations. That would seem the fair thing to do, she said, but there isn’t any precedent for the agency doing so. So to be safe, filing a protective claim makes sense.
Couples should consult their accountants for advice about filing a protective claim, which essentially involves filing an amended tax return, she said.