IRS Guidance on the Repeal of DOMA

(memo to Tufts Community)

We appreciate the interest received from the Tufts community regarding the implications of the recent United States Supreme Court ruling regarding same-sex marriage equality. We have been working closely with our experts to assess the implications of the decisions and impact to our benefit programs.
On August 30, 2013, the IRS issued Revenue Ruling 2013-17 and Frequently Asked Questions (FAQs) that address some of the tax issues relating to the Supreme Court’s decision to repeal part of the Defense of Marriage Act (DOMA). This is a brief summary of the major points of the Revenue Ruling. Click here for the summary of the FAQs that relate specifically to employee benefit plans.

  • The ruling provides that, for federal tax purposes, the terms "spouse," "husband," and "wife," includes an individual married to a person of the same sex if he or she is lawfully married under state law and the term "marriage" includes a legal marriage between individuals of the same sex. These terms do not include individuals who have entered into a registered domestic partnership, civil union, or other formal relationship under state law that is not a marriage.
  • For federal tax purposes, an individual’s marital status is recognized if the marriage was validly entered into in a state that authorizes same-sex marriage. It doesn’t matter where the employer is located or where the individual resides (e.g., if a couple is married in Maine and moves to Arkansas, they will continue to be treated as married for federal tax purposes).
  • The effective date of the ruling is Monday, September 16, 2013. However, the Ruling provides that taxpayers may rely on the ruling retroactively for purposes of filing original returns, amended returns, adjusted returns, or claims for credit or refund for any overpayment of tax, provided the limitation period for amending a return has not expired. In general, the limitation period is three years from the date the original return was filed or two years from the date the tax was paid, whichever is later. All items affected by the marital status of the taxpayer must be adjusted. A taxpayer may not be treated as married for some purposes but not others on the amended return.
  • The ruling states that retroactive reliance may be applied with respect to overpayments of income and employment taxes on employer-provided health benefits and fringe benefits that are excludable from income under Code Section 106, based on an individual’s marital status. The employee can treat employer-provided benefits with respect to a same-sex spouse as excludable from income. In addition, if the employee made pre-tax contributions under a cafeteria plan for his or her coverage and made after-tax contributions for his or her same-sex spouse, then the employee may treat the after-tax contributions as pre-tax contributions.

NEXT STEPS:

  • Effective September 16, 2013, same-sex married couples who currently have university sponsored health, dental and/or vision coverage in place for spouses (and children) will see a change in their payroll deductions. The deductions will automatically be changed from after-tax to pre-tax (this applies to the federal portion only as you would already be paying pre-tax on the state portion). In addition, the value of the employer-paid health, dental and vision insurance coverage will no longer be treated as imputed income and will be excluded from Box 1 of Form W-2 for 2013. No taxes will be withheld on the value of employer-paid health, dental, and vision insurance coverage for the remainder of the year.
  • Any new same-sex couple marriage will be treated as a special enrollment event under a Qualified Status Change.
  • Same-sex spouses who are legally married are eligible for COBRA under federal law.

If you have any questions on this information, please contact the HR Benefits Office at 617-627-3270 or benefits-feedback@tufts.edu.