United States: Treasury Department/IRS Issue Guidance Instructing Employers On How To Make Claims For FICA Refunds Or Credits Post-Windsor

On June 26, 2013, in United States v. Windsor,1 the Supreme Court held that section 3 of the Defense of Marriage Act (DOMA) is unconstitutional. (For a discussion of the issues and holding in United States v. Windsor, please see our client advisory of July 12, 2012.) Before Windsor, the IRS applied section 3 of DOMA to prohibit the recognition of same-sex marriages for purposes of Federal tax law. As a result, employers were required to withhold and pay employment taxes with respect to otherwise non-taxable benefits provided to the same-sex spouse of an employee. Shortly after the decision was handed down, the Treasury Department and the IRS announced that they intended to issue "streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses."2 On August 29, the Treasury Department issued Rev. Rul. 2013-17,3 which held:

  • For Federal tax purposes, the terms "spouse," "husband and wife," "husband," and "wife" include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term "marriage" includes such a marriage between individuals of the same sex;
  • For Federal tax purposes, a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex is valid even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages; and
  • For Federal tax purposes, the terms "spouse," "husband and wife," "husband," and "wife" do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term "marriage" does not include such formal relationships.

Rev. Rul. 2013-17 clarified that individual taxpayers are allowed to file a claim for a credit or refund of an overpayment of FICA and/or income tax with respect to employer-provided health coverage benefits or certain other fringe benefits. It also provided instructions for the filing of certain income and payroll tax refunds. (For an explanation of Rev. Rul. 2013-17, please see our client advisory of September 9, 2013.)

In recently issued Notice 2013-61, the Treasury Department and the Internal Revenue Service described methods, and provided special administrative procedures, under which employers and employees may make claims for refund or adjustments of FICA and Federal income tax withholding with respect to certain benefits provided to same-sex spouses. (The notice refers to these claims for refunds and adjustments collectively as "corrections.") Affected benefits include group health plans, cafeteria plans, and health reimbursement arrangements, along with qualified tuition reduction programs, arrangements providing or reimbursing meals and lodging for the convenience of the employer, and dependent care assistance programs (relating to the care of a disabled spouse). Thus, if an employee made a pre-tax salary-reduction cafeteria plan election that included health coverage for a same-sex spouse on an after-tax basis under his or her employer's group health plan, the taxpayer may now treat these amounts as pre-tax salary reduction amounts for both payroll and income tax purposes.

General correction procedures under current regulations

FICA taxes are reported on IRS Form 941, "Employer's QUARTERLY Federal Tax return," which is filed quarterly. Corrections are made using a Form 941-X, "Adjusted Employer's QUARTERLY Federal Tax Return," for each calendar quarter being corrected. Generally, a separate X form must be filed for each taxable period. Where an employer claims a refund or credit of FICA taxes for a prior year, the employer must file Forms W-2c (Corrected Wage and Tax Statement) for such year.

The employer's and employees' shares of FICA taxes (Social Security and Medicare taxes) may be corrected for any period during with the statute of limitations has not expired. In contrast, Federal income tax withholdings may be corrected only for the current calendar year, except in the case of an administrative error (e.g., wrong amount of withholdings reported on Form 941). The statute of limitations is generally three years from the date a return is filed. For Form 941 purposes, however, all four quarterly returns are deemed to be filed on April 15 of the following year. No adjustment may be made, however, if the overpayment relates to a return period for which the period of limitations on credit or refund of such overpayment will expire within 90 days of filing the adjusted return.

Corrections of overpayments of FICA tax are generally made only after an error has been determined or "ascertained" by making a claim for a refund. An error is ascertained only 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 must repay or reimburse the employee in the amount of the over-collection. In the case of FICA tax over-collected in a prior year, the employer must secure the employee's written statement confirming that the employee has not made any previous claims (or that the claims were filed but rejected) and will not make any future claims for a refund or credit of the amount of the over-collected FICA tax. This requirement does not apply, however, to the extent that the employee FICA taxes were not withheld from the employee or, after the employer makes reasonable efforts to repay or reimburse the employee or secure the employee's consent, the employer cannot locate the employee or the employee will not provide consent. No refund to the employer is allowed for the overpayment of withheld income tax which the employer deducted or withheld from an employee.

Special rule for the 3rd quarter of 2013

If an employer (i) withheld employment taxes with respect to same-sex spouse benefits paid to or on behalf of an employee in the third quarter of 2013, (ii) ascertains the amount withheld on such benefits, and (iii) repays or reimburses the employee for the amount of such taxes before filing the third quarter 2013 Form 941, the employer need not report the wages and withholding on its third quarter 2013 Form 941. If, however, the employer does not repay or reimburse the employee for the amount of the over-collection before filing the third quarter 2013 Form 941, the employer must report the amount of the over-collection either under the general method explained above or by applying one of the special administrative procedures described below.

Special administrative procedures for 2013 (on 4th quarter 2013 Form 941)

Notice 2013-61 provides two alternative special administrative procedures for employers that treated the value of same-sex spouse benefits as wages on Forms 941 for the first three quarters of 2013:

  • First alternative special administrative procedure — correct all calendar quarters of 2013 on 4th quarter Form 941 (due January 31, 2014).

Under the first alternative special administrative procedure, an employer must repay or reimburse its employees for the amount of the over-collected FICA tax and the over-collected income tax withholding with respect to the same-sex spouse benefits for the first three quarters of 2013 on or before December 31, 2013. After repaying or reimbursing the employees, the employer may reduce the fourth quarter wages, tips, and other compensation by the amount of the same-sex spouse benefits treated as wages for the first three quarters of 2013. The income tax withheld from wages, tips, and other compensation is similarly reduced by the amount of affected income tax withholding. The advantage of this procedure is that employers will not have to file separate Forms 941-X to correct each of the first three quarters of 2013.

Adjustments of Social Security taxes are limited to that portion of the benefits that, when added to other Social Security wages for the year, does not exceed the taxable wage base for the year ($113,700 in 2013). To the extent an employee's other wages exceed the taxable wage base, the adjustment of the FICA taxes related to same-sex spouse benefits will be limited to Medicare taxes. Additional rules are provided to ensure that use of this special administrative procedure does not result in a mismatch between total taxes and total liability for the quarter.

  • Second alternative special administrative procedure — correct all calendar quarters of 2013 on a single Form 941-X for the 4th quarter of 2013.

The second alternative special administrative procedure applies where an employer does not repay or reimburse employees for the amount of withheld FICA and income taxes with respect to same-sex spouse benefits provided in 2013 on or before December 31, 2013. In this case, the employer will file the 2013 fourth quarter Form 941 without making the adjustment. Correction will, therefore, require the filing of a Form 941-X. Under this option, an employer may file a single Form 941-X for the fourth quarter of 2013 to make adjustments or claim refunds or credits of overpayments of FICA taxes with respect to same-sex spouse benefits paid in all quarters of 2013. This option is available only if the employer has otherwise satisfied the requirements for filing Form 941-X, including repaying or reimbursing the over-collected employee FICA tax to employees (or, for refund claims, securing consents from employees), and obtaining the required written statements from employees. Employers using this approach are instructed to write "WINDSOR" in dark, bold letters across the top margin of page 1 of Form 941-X.

Notice 2013-61 advises that "[a]n employer may not make an adjustment for an overpayment of income tax withholding for a prior calendar year unless the overpayment is attributable to an administrative error." As a consequence, this second special administrative procedure cannot be used with regard to income tax withheld from employees with respect to same-sex spouse benefits in 2013 because an employer can use this Form 941-X procedure only if the employer did not repay or reimburse employees for the amount of withheld taxes with respect to same-sex spouse benefits provided in 2013 on or before December 31, 2013. Instead, employees will receive credit for the income tax withheld for purposes of determining any entitlement to a refund of income tax paid with respect to same-sex spouse benefits provided in 2013 when they file their individual return.

Special administrative procedure for years before 2013

Notice 2013-61 provides a separate special administrative procedure for employers to make adjustments or claims for refund or credit of overpayments of FICA taxes paid with respect to same-sex spouse benefits for any year before 2013. Under this procedure, the employer must take into account the applicable Social Security wage base in determining the overpayment of FICA taxes for the prior year being corrected. The employer may file one Form 941-X for the fourth quarter of the prior year, which includes the adjustments or refunds for all overpayments of employment taxes with respect to same-sex spouse benefits provided during such prior year, including overpayments reflected in the Forms 941 for the first three quarters of the year. As is the case with the second alternative special administrative procedure described above, employers using this approach are directed to write "WINDSOR" in dark, bold letters across the top margin of page 1 of Form 941-X.

This special procedure is subject to the usual requirements that apply in the case of corrections of overpayments for prior years, including the filing of Forms W-2c, repaying or reimbursing employees for overwithheld taxes, and obtaining the required written statements (and consents where applicable) from employees.


1. 70 U.S. ___, (2013).

2. U.S. Department of the Treasury Press Center, "All Legal same-sex Marriages Will Be Recognized for Federal Tax Purposes" (Aug. 29, 2013), available at: .

3. 2013-38 I.R.B. 201.

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.

Alden J. Bianchi
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.