Prior to the repeal of the Defense of Marriage act, many large employers elected to extend benefits traditionally reserved for married employees to employees in same-sex marriages, domestic partnerships and civil unions. Unfortunately for those couples, under the Defense of Marriage Act, the Federal Government did not extend the tax-free treatment of benefits to those couples.
Benefits such as health insurance, life insurance, and other benefits provided and exempted from tax under §125 Cafeteria Plans were considered taxable to the employee, and therefore subject to social security, medicare, and unemployment taxes.
With the repeal of DOMA, these forward thinking companies can reap a large tax refund as a benefit. Revenue Ruling 2013-17 allow companies to claim refunds for overpaid employment taxes paid on now-tax-free benefits.
For more information on claiming a refund of previously taxed benefits, please contact our office.