United States: The Windsor FICA Fix

Executive Summary:  As promised, the Internal Revenue Service has prescribed special procedures that employers may use in order to retroactively correct FICA withholding and payment following the Supreme Court's decision earlier this year in United States v. Windsor, and last month's Revenue Ruling 2013-17 (the "Ruling"), under which same-sex couples are treated as married for all federal tax purposes if they were legally married, regardless of residence.  For background, see our previous Legal Alert: IRS Answers Residence Question for Same Sex Spouses, at http://www.fordharrison.com/9568, and the article linked therein.                             

Prior to the Windsor decision, the Defense of Marriage Actprohibited recognition of same-sex marriages for purposes of Federal laws – including the Internal Revenue Code. As a result, employers were required to withhold and pay employment taxes with respect to certain benefits provided to an employee's same-sex spouse because the marriage was not recognized for purposes of the Code, and the benefits therefore could not be treated as excludable from gross income or wages for Federal income or employment tax purposes. Employers also may have withheld and paid employment taxes on amounts paid for services performed by an individual in the employ of the individual's same-sex spouse because the employment tax exceptions for certain remuneration paid to spouses would not have applied. Revenue Ruling 2013-17 provided generally that its holdings would be applied prospectively as of September 16, 2013 (the date of publication of the Ruling in the Internal Revenue Bulletin).

Taxpayers may also rely on the Ruling for the purpose of filing original returns, amended returns, adjusted returns, or claims for credit or refund for any overpayment of tax resulting from application of the Ruling, including for purposes of determining filing status and for purposes of providing exceptions from the definition of "employment," provided that the applicable statute of limitations has not expired, and further provided that if a taxpayer files an original, amended or adjusted return, or a claim for credit or refund, in reliance on the Ruling, all items required to be reported on the return or claim that are affected by the taxpayer's marital status are adjusted to be consistent with the new marital status reported on the return or claim. The Ruling also provides that taxpayers may rely (subject to the stated conditions regarding the applicable statute of limitations and consistency within the return or claim) on its holdings retroactively with respect to any employee benefit plan or arrangement or any benefit provided thereunder only for purposes of filing original returns, amended returns, adjusted returns, or claims for credit or refund concerning employment tax and income tax with respect to employer-provided health coverage or certain other enumerated employer-provided nontaxable fringe benefits.

Generally, corrections of overpayments of FICA tax can be made after an error has been ascertained either by adjustment or by requesting a refund. An error is "ascertained" when the employer has sufficient knowledge of the error to be able to correct it. Before making an adjustment of an overpayment of FICA tax with respect to an employee, an employer generally must repay (by making direct payment to the employee) or reimburse (by applying an overpayment against future tax) the employee in the amount of the overcollection prior to the expiration of the statute of limitations on credit or refund, and, in the case of FICA tax that was overcollected in a prior year, must also secure the employee's written statement that the employee has not made any previous claims (or has made claims but they were rejected), and will not make any future claims, for refund or credit of the amount of the overcollected employee-FICA tax. Before requesting a refund, an employer must either repay or reimburse the employee, or obtain the employee's consent to allowance of the refund and request a refund on the employee's behalf. (Employee consent need not be obtained if employee FICA was not withheld, if the employee cannot be located after diligent search, or if the employee refuses consent.)

Employers cannot adjust overpayments of withheld income tax after the end of the calendar year, except to correct administrative errors (e.g., reporting amounts on Form 941 that were, in fact, not withheld). In addition, no refund may be requested for an overpayment of withheld income tax which was withheld from an employee.

To make employment tax corrections for overpayments (that is, to make adjustments or to claim refunds), an employer uses Form 941-X. Generally, a separate "X" form must be filed for each taxable period. An employer adjusting a return filed for a prior year, or claiming a refund or credit of FICA taxes for a prior year, is also required to file Forms W-2c, Corrected Wage and Tax Statement, for the adjusted year. The employer also must file Forms W-2c correcting Forms W-2 if the amount of employee FICA tax (Social Security or Medicare) shown on the Form W-2 is incorrect and is adjusted or refunded, if the amount of Social Security wages or Medicare wages shown on the Form W-2 is incorrect; the amount shown in Box 1 (wages, tips, other compensation) is incorrect; or the amount of income tax actually withheld from the employee is incorrectly reported in Box 2 (Federal income tax withheld).

The IRS' new Notice (Notice 2013-61) states that "to reduce administrative burden, this notice provides special administrative procedures for adjustments and claims for refunds or credits for overpayments of employment taxes attributable to same-sex spouse benefits, including overpayments that result from a taxpayer's retroactive application of the holdings in Rev. Rul. 2013-17." The following procedures are prescribed.

  1. Overwithholding for the third quarter of 2013.  If an employer repays or reimburses the employee for the amount of taxes overwithheld in the third quarter before filing the third quarter's Form 941, the employer should not report the wages and withholding on the third quarter's Form 941. If the employer does not repay or reimburse the employee for the amount of the third-quarter overcollection before filing the third quarter Form 941, the employer must report the amount of the overcollection on that return and should use one of the special administrative procedures described below to make an adjustment or claim a refund for the overpayment.
  2. Correction in fourth quarter of employer- and employee-FICA, and income tax withholding, for first three quarters of 2013. An employer can adjust its fourth-quarter Form 941 in order to exclude amounts (as appropriate) from taxable wages, Social Security wages, Medicare wages, Social Security tax withheld, Medicare tax withheld and Additional Medicare tax withheld, and may make corresponding adjustments to employer-FICA payments reported, to reflect exclusion of previously-included amounts from first three quarters' returns. Any amounts that have to be refunded to employees in order to effect this correction must be paid by December 31, 2013. This alternative eliminates the need to file Forms 941X.
  3. Alternative Correction in fourth quarter. If required repayments to employees are not made by December 31, an employer may still correct by filing a single Form 941X in the fourth quarter, adjusting the entire year, instead of filing separate forms 941X for each prior quarter, provided that the usual requirements that apply to claims for adjustment or refund are met (e.g., reimbursing overcollected employee FICA, obtaining employee consent for refund claims, etc.). Additional specific instructions are provided; e.g., write "WINDSOR" on page 1 of the Form 941X; include in the claim only amounts that may be adjusted under the Notice, etc.
  4. Correction of FICA overpayments for prior years. Overpayments (and overwithholding) of FICA for years prior to 2013, but for which the statute of limitations has not expired, may be corrected by filing a single Form 941X for the fourth quarter of the year, incorporating totals for the year. Corrections are otherwise subject to all additional requirements (e.g., furnish Forms W-2c to affected employees), as well as some added requirements (e.g. write "WINDSOR" on the return).  Income tax withholding for prior years may not be adjusted by employers, but Form W-2c showing corrected amounts of wages will enable employees to obtain refunds of overpaid income taxes.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions