On August 29, 2013, the U.S. Department of the Treasury and the
Internal Revenue Service issued important guidance for employers
and employees relating to the impact of the Windsor
decision on employee benefit plans. In Revenue Ruling 2013-17, the
agencies ruled that a same-sex couple legally married in any
jurisdiction will be recognized as spouses by the IRS for federal
tax purposes even if the couple resides in a jurisdiction that does
not recognize the validity of their marriage. This “place of
celebration” rule is welcome news for employers and other
benefit plan sponsors, who may now administer their benefit plans
in a uniform manner with regard to same- and opposite-sex married
couples. (The Ruling confirms, however, that unmarried
domestic partners and civil union partners will not be recognized
as married for federal tax purposes, whether the partners are the
same or opposite sex.). See (http://www.proskauer.com/publications/client-alert/special-alert-for-employers-and-other-benefit-plan-sponsors/)
for our Client Alert discussing the impact of Windsor on
employee benefit plans.
Although the Ruling is technically effective on a prospective
basis as of September 16, 2013, it may be relied on by affected
taxpayers on a retroactive basis for purposes of filing original,
amended or adjusted tax returns, as well as claims for credits or
refunds of overpaid taxes, provided that the applicable limitations
period has not expired (i.e., generally, three years from the date
the return was filed).
The IRS has updated its website to include FAQs providing
guidance for employees on how they may recover federal
income taxes paid on the value of health coverage provided to a
same-sex spouse and on the premiums paid for such coverage on an
after-tax basis. The FAQs also offer guidance for
employers regarding refunds for Social Security and
Medicare taxes paid on income imputed to employees for health
benefits provided to same-sex spouses, and on the circumstances in
which employers may make adjustments for overwitheld income
With regard to qualified retirement plans, the FAQs make clear
that legally married same-sex spouses must be recognized as spouses
for purposes of all federal tax rules applicable to qualified
The agencies intend to issue additional guidance relating to
cafeteria plans and also on how Windsor and the IRS Ruling
will apply to qualified retirement plans and other tax-favored
arrangements for periods prior to the effective date of the
Employers and plan sponsors need to consider carefully how to
interpret the Ruling in the context of their various benefit plans
and overall employment and HR policies. In addition, employers and
plan sponsors should watch future guidance for how the Ruling
impacts legal compliance under ERISA, COBRA, HIPAA (including HIPAA
privacy), PPACA (health care reform), and other related federal and
state laws affecting employee benefit plans.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Effective January 1, 2015, certain employers became subject to the employer mandate of the Patient Protection and Affordable Care Act, and thus subject to liability under the ACA Employer Shared Responsibility provisions.