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Employer Claim for Refund for Employment Taxes Paid on Benefits to Same-Sex Spouses

Published: September 18th, 2013
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On August 29, 2013, the IRS and U.S. Treasury Department released Revenue Ruling 2013-17, addressing tax issues arising from the U.S. Supreme Court decision in U.S. v. Windsor.  The Ruling generally provides that same-sex couples legally married in one state are married for all federal tax purposes.

We wish to highlight one particular impact of this ruling for employers, specifically for those who provided benefits to same-sex spouses.  Under DOMA, qualified benefits such as employer-paid health care coverage or group term life insurance were only excludible for income tax purposes if they were provided to opposite sex spouses and dependents, while such benefits provided to same-sex spouses would have been subject to FICA and income taxes.  Under Windsor and the new Ruling, these amounts are excludible when provided to same-sex spouses as well.  The Ruling specifically allows for employers to seek a refund of FICA taxes paid on the imputed value of qualified benefits.  Future guidance from the Treasury Department will provide specific streamlined procedures to make a claim for refund of employment taxes paid on qualified benefits for same-sex spouses.

Employers who provide qualified benefits for same-sex spouses should ensure that these benefits are excluded going forward.  In addition, employers should begin gathering the necessary information in order to file a claim for refund for any employer matched FICA paid in the past three years which may be eligible for refund.  As new information becomes available on making the claims for refund, we will post it on our blog.

For more information on Ruling 2013-17, see our previous post here.