President Signs Military Spouse Residency Relief Act

President Obama signed into law the Military Spouse Residency Relief Act, P.L. 111-97, which will ensure that the spouses of military personnel who move because their service member spouse is posted for military duty will be treated as not having changed residency for tax purposes.

Under the act, the fact that a military spouse is present in or absent from a jurisdiction in the United States will not affect the spouse’s residence or domicile for tax purposes, as long as that presence in or absence from the jurisdiction is due to the service member spouse’s compliance with military orders. In addition, any income the military spouse earns in a jurisdiction will not be treated as income from services performed or sources within that jurisdiction if the spouse is not treated as a resident of the jurisdiction under the act.

The act conforms the treatment of military spouses to the treatment accorded military personnel under the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. App. Sections 501 et seq. Congress was concerned that in certain cases, military personnel were losing the benefits of the SCRA where they held property in joint title with their spouses. For example, where the family car was not titled in the service member’s name only, some states were collecting personal property tax on that car. In addition, military families were subject to return filing complications when the service member retained residency in the home state but the spouse was treated as a resident of the new state.

The act is effective for any state or local tax return filed for any tax year that includes the date November 11, 2009.