SDNY Declares DOMA Unconstitutional in Estate Tax Case

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Last month the United States District Court for the Southern District of New York  ruled in Windsor v. United States that DOMA is unconstitutional as applied. Read the full decision here.

Edie Windsor and Thea Spyer were married in Canada in 2007.  Ms. Spyer died in 2009, prior to the enactment of New York State law permitting same-sex marriage.  Ms. Spyer left her  entire estate to Ms. Windsor.  The IRS denied Ms. Speyer’s estate the marital deduction under IRC Section 2056.  The estate paid over $360,000 in estate tax. Ms. Windsor sued for a refund on the grounds that DOMA violates the Equal Protection Clause.

There were two issues in the case: a procedural standing issue, and the substantive issue of Equal Protection. Judge Barbara Jones ruled in the plaintiff’s favor on both.

The standing issue was somewhat complex.  Ms. Windsor individually — not Ms. Windsor as executor of Ms. Spyer’s estate –  sued for a refund.  The Bipartisan Legal Advisory Group of the U.S. House of Representatives (“BLAG”) defended the action, because the Attorney General has announced that it will not defend DOMA’s constitutionality.  BLAG argued that Ms. Windsor had no standing to challenge the law, because she could not prove a “causal connection” between the alleged injury and the government’s action.  In other words, BLAG argued that Ms. Windsor and the decedent were not married for state law purposes.  Judge Jones rejected that argument, pointing out that at the time of the decedent’s death New York State executive agencies and appellate courts all recognized the legal validity of a same-sex Canadian marriage.

On the constitutionality of DOMA, the plaintiff argued for the application of strict scrutiny.  Judge Jones declined to take up that question, ruling instead that DOMA did not pass rational basis scrutiny.  In dicta, Judge Jones remarked on a distinction in the standards of rational basis scrutiny applied by the United States Supreme Court depending on whether the law was economic or tax-related on the one hand, or exhibiting a “desire to harm a politically unpopular group,” on the other hand.  Judge Jones then noted that regardless of which variant on rational basis was employed, the government had no legitimate asserted interest in DOMA.

The judge rejected the BLAG’s assertion that DOMA advanced a governmental interest in maintaining a traditional definition of marriage, promoting child-rearing or conserving federal resources.  The opinion did acknowledge some link between DOMA and the consistent distribution of federal benefits, but that DOMA “intrude[s] upon the states’ business of regulating domestic relations.”

The decision will no doubt be appealed.  There are at least 5 other federal tax cases challenging DOMA.  We can expect action in both the Second Circuit (this case) and the First Circuit (in Gill v. Office of Personnel Management).

For prior coverage of the Windsor case, read Pat Cain’s posts here and here.

-Bridget Crawford

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