The Defense of Marriage Act and Your Taxes

The federal Defense of Marriage Act defines a marriage as being between a man and a woman.  Recently the Second Circuit Court of Appeals ruled that the Defense of Marriage Act is unconstitutional (Windsor v. United States).  It is expected that the Second Circuit Court’s ruling will be appealed. The issue may eventually have to be decided by the Supreme Court.

What does this have to do with taxes? The potential for changes in the status of same sex marriages makes it important to take steps to cover all possibilities, including the filing of tax returns. Continue reading

Appeals Court Rules Severance Payments Not Subject to FICA Taxes

In a recent Appeals Court ruling (Quality Stores, 6th Cir.), it was decided that certain severance payments for laid-off workers are exempt from FICA. They are, however, subject to income tax withholding. It is important to note that in 2008, the IRS won a Federal Court case on the identical issue. We expect this decision to be appealed and eventually decided by the Supreme Court. 

We suggest that any business that has paid FICA on severance payments for laid-off workers consult their tax advisors regarding the preparation of a protective claim for refund. This is a very complex issue so if you have any questions, please contact our Tax Department at (781) 407-0300 or

A Major Win for Gift Tax Valuation

A recent tax court decision, Wandry v. Commissioner, T.C. Memo 2012-88, found that a gift can be made indicating an amount of assets rather than what the assets are.  The taxpayers made a gift to their children and grandchildren in an LLC based on a specific dollar amount rather than a percentage of the LLC.  Although this may not sound like much of a difference, there is an important distinction between the two.  Simplistically, what it accomplished is that if the IRS was able to challenge and change the valuation of the percentage of the LLC gifted, the percentage would change and the taxpayer would not incur any additional gift tax exposure.  This means that regardless of the eventual findings, the IRS could not collect additional taxes. Continue reading