The Marriage Equality Act (the "Act") was signed into
New York state law on June 24, 2011, granting same-sex couples in
New York the same legal right to marriage as opposite-sex couples.
The New York state Department of Taxation and Finance (the
"Department") has recently issued guidance explaining the
Act's impact on the state's personal income, estate,
withholding and sales taxes.
Same-sex couples who are married as of December 31, 2011, will
be required to file their New York state return under
"married" status, even if they file as individual or head
of household on their federal return. However, their marital status
remains unrecognized for federal tax purposes. Therefore employers
that use a federal definition of spouse under the Defense of
Marriage Act (one man and one woman) may now have to take a
bifurcated approach when considering tax issues relating to
same-sex couple employees who are participating in company benefit
The Department's website indicates, for instance, that
employers should not withhold tax for New York (state, New York
City or Yonkers) income tax purposes on the value of certain
benefits provided to same-sex married employees, such as domestic
partner health benefits, even though the same benefit would be
subject to federal withholding. This applies if the employee's
federal taxable wages subject to withholding include the value of
the benefits, and the value of these benefits wouldn't be
included in taxable wages if provided to an opposite-sex married
The Department's guidance on withholding tax information
regarding same-sex married employees, found at www.tax.ny.gov/pit/withholding_mea.htm, also
advises same-sex married employees to file a new Form IT-2104
(Withholding Allowances Certificate) and to provide proof of their
marriage to their employers. Employers are instructed to continue
using the rules described in NYS-50, Employer's Guide to
Unemployment Insurance, Wage Reporting, and Withholding Tax for
reporting state and local wages on federal Form W-2, and are given
the following guidance with regard to reporting annual wage
When reporting the annual wage totals on Form NYS-45, Quarterly
Combined Withholding, Wage Reporting, and Unemployment Insurance
Return, Part C, column d; report the federal wages minus any amount
of benefits discussed above that you don't withhold on for New
York purposes (plus any amount of any taxable 414(h) retirement
contributions and any IRC 125 amounts from a New York City flexible
benefits program for governmental employees).
Employers should review existing plans to determine whether any
changes are necessary and/or what clarifications should be
communicated to employees.
On October 5th, 2016, the Internal Revenue Service and Treasury Department published final, temporary and reproposed regulations1 under Sections 707 and 752 of the Internal Revenue Code of 1986, as amended.
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