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IRS Procedures to Correct Overpayments on Taxes for Same-sex Spouse Benefits

Learn about the special procedures created by the IRS for employers that need to correct overpayments on taxes for same-sex spouse benefits --- via CBG Benefits.Since the Supreme Court’s DOMA decision earlier this year, employers have slowly been receiving guidance on how their processes would need to change.

That continued on September 23rd, when the IRS issued Notice 2013-61. That notice created special procedures that employers can use to correct overpayments of employment taxes on same-sex spouse benefits.

Here are a few key items from this notice that may impact your business:

  • Purpose of the Special Procedures: The special procedures are designed to reduce employers’ filing and reporting burdens. They are provided as an option to regular procedures for correcting employment tax overpayments.
  • Alternative #1:  An employer must repay or reimburse employees for the amount of the over-collected FICA tax and income tax withholding with respect to same-sex spouse benefits for the first three quarters of 2013 on or before Dec. 31, 2013. After repaying or reimbursing employees, employers use the fourth quarter 2013 Form 941 to correct overpayments of employment taxes for the first three quarters of 2013.
  • Alternative #2:  Under this option, employers file Form 941-X for Q4 2013 to correct the overpayment of FICA taxes during all quarters of 2013. This method cannot be used for income tax withheld from employees. However, employees receive credit for the income tax withheld for purposes of determining any entitlement to a refund of income tax paid with respect to same-sex spouse benefits provided in 2013 when they file Form 1040.

We hope that you find this information helpful.

To learn more about these special procedures, please contact the CBG Benefits team to receive a copy of our Compliance Bulletin on this topic.


Photo Credit: 401(K) 2013 via Compfight cc

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Posted in: Benefits and Insurance, Human Resources, Legislation

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