Two Federal Courts Rule Defense of Marriage Act Unconstitutional, Raising Issue of Filing of Protective Claims for Refund of the Estate Tax for Affected Surviving Spouses
Within the past few weeks two important federal cases -- Commonwealth of Massachusetts v. United States Department of Health and Human Services and Windsor v. United States -- found that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional on equal protection grounds. Pending certain Supreme Court review, it is recommended that affected clients make a protective claim for refund of the estate tax that may be due.
On May 31, 2012, the Court of Appeals for the First Circuit issued an opinion in Massachusetts v. HHS, finding that section 3 of the DOMA is unconstitutional on equal protection grounds. The court found that Section 3 of DOMA failed a heightened rational basis standard of equal protection review. This is not a constitutional law blog but here is a summary:
As the Court described, review of statutes affecting certain historically suspect classifications -- race, alienage and national origin -- requires strict scrutiny. This requires that the statute address a serious issue (a “compelling governmental interest”) and be narrowly tailored to address that issue. Gender-based classifications invoke intermediate scrutiny and must be substantially related to achieving an important governmental objective. However, “rational basis review” is applied in routine matters of commercial, tax and like regulation. Under this lowest standard, Courts accept as adequate any plausible factual basis, without regard to Congress' actual motives. The means need not be narrowly drawn to meet--or even be entirely consistent with--the stated legislative ends.
In this case however, the Court employed a heightened level of scrutiny which it felt had been required by Supreme Court precedent. Where there were “historic patterns of disadvantage suffered by the group adversely affected by the statute . . . a more careful assessment of the justifications than the light scrutiny offered by conventional rational basis review” were appropriate. The Appeals Court found that DOMA intrudes broadly into an area of traditional state regulation which, combined with federalism concerns, violated equal protection. “If we are right in thinking that disparate impact on minority interests and federalism concerns both require somewhat more in this case than almost automatic deference to Congress' will, this statute fails that test.”
On June 6, 2012, a federal district Judge for the Southern District of New York ruled that Section 3 of DOMA was unconstitutional in that it prevented the surviving spouse of a same-sex couple from qualifying for the unlimited marital deduction under IRS Code Section 2056(a).
Protective claim for refund. If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. A protective claim can be either a formal claim or an amended return for credit or refund. Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. A protective claim preserves your right to claim a refund when the contingency is resolved. A protective claim does not have to state a particular dollar amount or demand an immediate refund. However, to be valid, a protective claim must:
Be in writing and be signed,
Include your name, address, social security number or individual taxpayer identification number, and other contact information,
Identify and describe the contingencies affecting the claim,
Clearly alert the IRS to the essential nature of the claim, and
Identify the specific year(s) for which a refund is sought.
