H&W: Correcting Overwithholding on Same-Gender Spouse Benefits

The IRS has issued guidance for employers and employees correcting overwithholding on same-gender spouse benefits for claims for refunds or adjustments of overpayments of Federal Insurance Contributions Act (FICA) taxes and Federal income tax withholding (employment taxes) with respect to certain benefits provided to same-sex spouses and remuneration paid to same-sex spouses (Notice 2013-61). The availability of these refunds results from the recent Supreme Court decision in United States vs. Windsor that struck down portions of the Defense of Marriage Act.

Shortly after the Windsor holding, the IRS issued Revenue Ruling 2013-17 in which it announced its intention to treat same-sex married couples as married for all purposes under the Tax Code provided that they were married in a state that recognizes same-sex marriages (see our Blog).  Prior to the Windsor decision, employers that provided health and welfare benefits to same-sex spouses should have been treating the value of that coverage as income to the employee and should have been paying FICA taxes on those amounts. Revenue Ruling 2013-17 allowed employers who paid such taxes to claim a refund.

In its Notice 2013-61, the IRS has set forth “special administrative procedures” intended to reduce the administrative burden attendant upon filing for these refunds.  Employers that wish to take advantage of this refund opportunity should familiarize themselves with the details of those procedures.