Expert Insight: Unknotting Windsor And the State of Same-Sex Marriages Under Hollingsworth

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

Nicole M. Pearl, interviewed by Melissa Fernley

Nicole M. Pearl is a partner at McDermott Will & Emery LLP and is based in the Los Angeles office. Nicole focuses her practice on estate planning, wealth transfer planning, marital property agreements, business succession planning, and post-death administration. She can be reached at

Melissa Fernley is a state tax editor with Bloomberg BNA.

BLOOMBERG BNA: Can you give us a general picture of the decisions in Windsor1 and Hollingsworth2?

PEARL: In Windsor the Court looked at Section 3 of DOMA3 which defines marriage as between one man and one woman for purposes of federal laws. Striking down this section of DOMA causes the federal government to recognize same-sex marriages that are validly performed in any state where same-sex marriage has been legalized.

Hollingsworth involves Proposition 8, a voter-passed referendum that barred same-sex marriages in California performed after November 2008. The Supreme Court dismissed the case for lack of standing, so the district court decision will stand. That decision held that Proposition 8 is unconstitutional in California, so now couples in California will be able to marry. Before today it was unclear whether the ruling was going to apply to all counties in the state, or only to the counties involved in the case. However, Gov. Brown just released a statement that he has already obtained the necessary Attorney General opinion and that the ruling would apply to all California counties. It also means that all marriages that were performed in other states, regardless of when they were performed, will be recognized in California.


BLOOMBERG BNA: Windsor has definitely raised a lot of questions. Given the decision, what has to change in states that allow same-sex marriage, and in states that do not?

PEARL: Couples that are currently living in states that do not allow same-sex marriage are unaffected by the decision, although it is unclear whether there will be any changes if they fly to a state that does allow same-sex marriage in order to get married.

All couples who have legally married in their state of residence will be treated the same as their heterosexual married counterparts and entitled to all of the federal benefits that go along with marriage. This means that they will be able to file joint federal tax returns, will qualify for spousal benefits under social security and other federal programs, will be entitled to preferred immigration status, and so on.


BLOOMBERG BNA: Many states which have legalized same-sex marriage have had to restructure their calculation of individual income and death taxes because they begin with the amounts determined on the federal return, which previously barred same-sex couples from filing joint returns. Now the situation is reversed, and states which do not recognize same-sex marriage will need to restructure if they intend to bar same-sex couples from joint filing in the state. How do you think the states will handle this?

PEARL: Couples living in a state that allows same-sex marriage will now be able to file joint federal tax returns. What's less clear is whether the couples who get married in a state that recognizes same-sex marriage but move to a state that does not, will still be able to file joint returns. You may have a different result based on the connection of the couple to the state in which they were married. We're going to have to wait and see how the regulations play out. For now, such a couple could try to file a joint federal return but will need to create pro forma individual federal returns in order to file separately in the state.

BLOOMBERG BNA: How does the Court's finding DOMA unconstitutional affect the tax returns that same-sex couples have filed in the past? Would there be an opportunity for amended returns and refunds, and what sort of issues might these amended returns cause?

PEARL: This allows same-sex couples who have created a legal marriage in any state to go back and amend any income, estate, or gift tax returns in which the statute is still open (generally three years from the date of filing). This would allow couples to go back as far as their 2009 returns (assuming that they were filed on extension in 2010). Of course, there is no duty to amend tax returns so couples can decide based on their particular circumstances whether this would make sense for them.

This also gives rise to further questions. For instance, are couples that registered as domestic partners or formed civil unions in their states of domicile because they were not allowed to marry in those states allowed to go back and amend their returns? Could they be considered to be married under federal law, or would they have to take some further step in order to legitimize their marriage (for example, obtain a marriage license).


New Challenges to DOMA

BLOOMBERG BNA: What are your predictions for how the states will respond to these changes?

PEARL: I'm guessing that there will likely be a challenge to Section 2 of DOMA, which says that no state has to recognize a marriage performed in another state. I also think that we will see some regulation from the federal government in the meantime, clarifying what all these changes mean. For instance, the IRS could issue Treasury Regulations that say as long as you are validly married in one state, the federal government will recognize it no matter where you live afterwards. Or they could say that for federal estate tax purposes, they are going to consider the law of the state that was your domicile as of the date of death. There may be different results in different areas of the law, since there will be regulations coming from all areas of the government.


BLOOMBERG BNA: Do you suspect that domicile in a state could now become a big issue in determining the status of a same-sex couple?

PEARL: The situation in which you have a couple living in a state that allows same-sex marriage for a long time, but then moving to a state that doesn't allow it, could be treated differently than the situation where a couple that lives in a state that doesn't allow same-sex marriage flies to a state that does allow it only in order to get married. They may have less ties to the state in which they married, and that marriage clearly is against the public policy of their own state; it may be given less credence than a marriage that was performed in a jurisdiction that the couples had a strong connection to. You often see these distinctions being played out in cases involving common law marriage, which is allowed in some states and not in others.

BLOOMBERG BNA: Do you think the states will try to pre-empt some of the challenges to the law by making changes to their policy?

PEARL: We will maybe see a flurry of states quickly jumping on the bandwagon of same-sex marriage. States that have “separate but equal” systems of civil unions and domestic partnerships may also make changes. For example you have a state like Illinois where they allow domestic partnerships, which grants for state purposes most of the same rights as marriage. The DOMA decision didn't affect the couples that were registered as domestic partners because they are not marriages. Such states are either going to amend the law to allow same-sex marriage, perhaps converting domestic partnerships to same-sex marriages, or you may see further lawsuits challenging the separate but equal systems.


1 United States v. Windsor, No. 12-307 (June 26, 2013).

2 Hollingsworth v. Perry, No. 12-144 (June 26, 2013).

3 Defense of Marriage Act, Pub. L. No. 104-199, enacted Sept. 21, 1996; see 1 U.S.C. §7 and 28 U.S.C. §1738C.

Request Weekly State Tax Report