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Employers, Employees Still Confused Over DOMA Rules
Author: Scarinci Hollenbeck, LLC
Date: September 2, 2013
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Nearly two months after the U.S. Supreme Court’s ruling that the Defense of Marriage Act is unconstitutional, employers and employees alike are still confused about how the court’s decree will affect them.
Employee Benefit News recently reported that many employers are unsure about whether they need to change their policies for same-sex couples immediately, and which policies need to be altered. Employees have some confusion as well about whether the Internal Revenue Service will consider where same-sex couples live when making benefit determinations or where they were married. This question could have large implications on health insurance costs.
For instance, Kaiser Health News recently noted that some employers offered health insurance to same-sex couples prior to the DOMA strike down. In these cases, employees who utilized this health insurance benefit were required to pay federal income tax on the value of that coverage, which is considered imputed income. Following the court’s ruling, same-sex couples who live in states that allow marriage will no longer be required to pay this income. However, the issue gets more complex for couples who live outside these states.
“If the IRS decides to follow its standard practice and recognize marriages based on where a couple lives, these couples could still be responsible for paying income tax on the value of a spouse’s health insurance,” the analysis read. “But if the IRS goes with the place of celebration standard, couples living in states that don’t recognize their marriages could avoid paying federal income tax on the spouse’s health insurance.”
Non-health related financial issues are also up in the air, with employers confused about whether they must provide benefits to same-sex workers retroactively. Couples are also on the fence about whether they can legally seek out refunds from prior returns if it falls within the three-year statute of limitations for amending returns. As these tax law issues remain unresolved, employers are being urged to seek legal advice and proceed with caution.
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Employers, Employees Still Confused Over DOMA Rules
Author: Scarinci Hollenbeck, LLC
Nearly two months after the U.S. Supreme Court’s ruling that the Defense of Marriage Act is unconstitutional, employers and employees alike are still confused about how the court’s decree will affect them.
Employee Benefit News recently reported that many employers are unsure about whether they need to change their policies for same-sex couples immediately, and which policies need to be altered. Employees have some confusion as well about whether the Internal Revenue Service will consider where same-sex couples live when making benefit determinations or where they were married. This question could have large implications on health insurance costs.
For instance, Kaiser Health News recently noted that some employers offered health insurance to same-sex couples prior to the DOMA strike down. In these cases, employees who utilized this health insurance benefit were required to pay federal income tax on the value of that coverage, which is considered imputed income. Following the court’s ruling, same-sex couples who live in states that allow marriage will no longer be required to pay this income. However, the issue gets more complex for couples who live outside these states.
“If the IRS decides to follow its standard practice and recognize marriages based on where a couple lives, these couples could still be responsible for paying income tax on the value of a spouse’s health insurance,” the analysis read. “But if the IRS goes with the place of celebration standard, couples living in states that don’t recognize their marriages could avoid paying federal income tax on the spouse’s health insurance.”
Non-health related financial issues are also up in the air, with employers confused about whether they must provide benefits to same-sex workers retroactively. Couples are also on the fence about whether they can legally seek out refunds from prior returns if it falls within the three-year statute of limitations for amending returns. As these tax law issues remain unresolved, employers are being urged to seek legal advice and proceed with caution.