Tax & Assurance Guidance

What are the Employer Implications of Same-Sex Marriage?

Posted on April 14, 2014 by

Clayton & Mckervey

Clayton & McKervey

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In the wake of the landmark decision last summer by the U.S. Supreme Court in United States v. Windsor, employers have been grappling with the impacts same-sex marriage will have on their businesses. With the recent decision in DeBoer v. Snyder, executives in Michigan have started to take a closer look at the effects. If you have not looked into the implications for your business, please read on.

As a backdrop, both the Internal Revenue Service and the Department of Labor have announced they will follow a “state of celebration” rule in determining marital status regardless of where a couple lives. As a result, a legal same-sex marriage may very well be recognized for federal tax purposes even though the couple may be living in a state that does not recognize the legality of their marriage.

Given the significant penalties that can be assessed for non compliance, employers are beginning to reassess the implications to their businesses, which include:

  • Withholding tax requirements can be impacted by a person’s marital status, so conferring with your payroll department or payroll service provider might be in order
  • Elections, coverage, and reimbursements for health savings accounts (HSAs) and flexible spending arrangements (FSAs), along with COBRA continuation and family medical and military leave (FLMA), will all need to be reviewed and addressed
  • Retirement plans will need to be reviewed since there are numerous spousal protections built into the rules, which are established at the federal level, that govern these plans and will apply to same-sex spouses

The government, and others, are providing guidance with regard to the above issues. We would encourage you to touch base with your legal team before proceeding but would welcome your calls to discuss this very important development in operating your business.

Clayton & McKervey

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