Streamlined Employment Tax Refund Process Following Windsor

The June 26 Supreme Court decision ruled the federal Defense of Marriage Act (DOMA) unconstitutional. Effective September 16, 2013, same-sex spouses are treated as spouses under the Internal Revenue Code, and therefore, a number of health, welfare, and fringe benefits that would otherwise have been tax-free to an opposite-sex spouse, are now also tax-free for same-sex spouses.

Therefore, no imputed income (or after-tax payments) is required for such coverage/benefits as of September 16, 2013 (or earlier, if elected by the employer). The IRS recently issued Notice 2013-61 that provides employers with a streamlined process to adjust payroll taxes (including Railroad Retirement Tax Act and FUTA) for 2013, and claim refunds for prior open years. The guidance is briefly summarized in the following memo:

Streamlined Employment Tax Refund Process Following Windsor