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Bloomberg Discusses FICA Tax Reimbursement for Same-Sex Spousal Benefits with Joanne Youn

September 26, 2013, Bloomberg BNA's Daily Tax Report

Bloomberg BNA's Daily Tax Report contacted  Joanne C. Youn regarding the retroactive application of United States vs. Windsor for purposes of claiming refunds or credit for overpaid employment taxes.  Employers and employees may now be able to make claims for refund of FICA taxes that were overwithheld because employers treated as taxable income certain benefits for same-sex spouses that are properly characterized as pre-tax in light of Windsor. For the complete article, please visit Bloomberg BNA's website (subscription required).

Excerpts taken from the article.

"Choice often adds complexity, and the IRS has provided taxpayers with a number of options for adjusting their FICA tax liability in light of the Windsor ruling," Joanne Youn, a member in Caplin &  Drysdale's Employee Benefits practice, told BNA in a Sept. 25 e-mail.

Because of the requirement to obtain employee consent for the employer to file for refund on their behalf, "some small employers may choose not to make use of these procedures and instead allow their employees to file their own claims for overwithheld FICA taxes," Youn said.      

While the instructions in the notice may be somewhat technical, "employers should already be familiar with the procedures for completing original Forms 941 and/or amended Forms 941-X," Youn said.

"If they are able to properly determine the FICA taxes they erroneously withheld and paid with respect to benefits for same-sex spouses, the filing process itself may not prove too onerous," she said.

The IRS also clarified in the notice that only corrections made under the special administrative procedures may be shown on the form marked with the Windsor case name, Youn said.

"The IRS has noted in situations prior to and distinct from Windsor that filing more than one Form 941-X with respect to the same reporting period may be appropriate, so this would not be a novel practice," Youn said.

While the IRS's most recent notice "provides important technical guidance on claiming refunds or adjustments of overpaid FICA taxes, it elaborates upon but does not expand the retroactive relief the IRS already described in general terms in Revenue Ruling 2013-17 released a few weeks ago," Youn said.

Guidance is still required on many other open questions regarding the retroactive application of the Windsor decision to employee benefit plans such as spousal annuities and distributions to surviving spouses, she said.

Reproduced with permission from Daily Tax Report, 187 DTR G-4 (Sept. 26, 2013). Copyright 2013 by The Bureau of National Affairs, Inc. (800-372-1033) <>


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