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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

 

 

August 7, 2014

 

 State and Federal Law Alert

 

 

 

IRS Guidance Explains Process for Obtaining Refunds for Taxation of Same-Sex Spousal Health Coverage 

 

 

 

IRS has released Information Letter 2014-0012, which outlines the process for employees to obtain a refund of taxes paid on the value of employer-sponsored health coverage provided to an employee's same-sex spouse. This guidance comes in the wake of the U.S. Supreme Court's decision in United States v. Windsor, which declared Section 3 of the Defense of Marriage Act ("DOMA") unconstitutional. (See the Alert of 6/27/13.)   Section 3 of DOMA prohibited the recognition of same-sex couples as spouses for federal tax purposes.

 

Background. Pursuant to Section 3 of DOMA, IRS had said that the while the value of group health care coverage for opposite-sex spouses is not taxed, the value of coverage for same-sex spousal coverage is taxable income to the employee. Also, while employees could pay their share of the cost of opposite-sex spousal group health coverage on a pre-tax basis, the employees could not do so for a same-sex spouse.

 

In response to the U.S. Supreme Court's Windsor decision, the IRS issued guidance (i.e., Revenue Ruling 2013-17) providing that same-sex spouses will be treated as any other spouse for federal tax purposes, provided the couple is legally married under state law. Subsequent IRS guidance (i.e., Notice 2014-1) clarified that: (i) for federal tax purposes, the value of employer-sponsored health care coverage provided to an employee's same-sex spouse is excludable from income, and (ii) the employee cost for same-sex spousal coverage could be paid on a pre-tax basis using a Section 125 cafeteria plan.

 

Information Letter 2014-0012. The Information Letter offers two possible correction methods for employees who have had the value of same-sex spousal coverage included in their Form W-2: 

  • The employee can request that the employer provide a corrected Form W-2 that does not include the value of the spousal health coverage in taxable wages. If the employer issues a corrected Form W-2, the employee can then use the corrected Form W-2 when filing a personal tax return.
  • If the employer does not issue a corrected Form W-2, the employee can complete Form 4852 (i.e., Substitute for Form W-2, etc.) in accordance with the instructions provided in the Letter and file it with a completed Form 1040 and the uncorrected Form W-2.  

The Letter also explains that employees may be entitled to a refund of federal employment taxes paid on the value of same-sex spousal health coverage. Employees are advised to contact their employer to determine if the employer will seek a refund of these amounts on the employee's behalf. If the employer will not seek a refund, the employee can file Form 843 (i.e., Claim for Refund and Request for Abatement).

  

Action Steps for Plan Sponsors. Employers are not required to issue corrected Forms W-2 or seek a refund of federal employment taxes. Thus, employee relations will likely dictate whether employers issue corrected Forms W-2 or seek refunds of federal employment taxes. Payroll departments are advised to ensure that their FormW-2 reporting and federal employment tax withholding practices comply with Windsor and subsequent IRS guidance.

 

The Information Letter 2014-0012 can be accessed at: http://www.irs.gov/pub/irs-wd/14-0012.pdf

 


 

 

 

 

 

 

 

This Newsletter is protected by copyright. Material appearing herein may be reproduced with appropriate credit.

  

Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.

 

This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.