Current and former state employees in Massachusetts who were discriminated against by the federal Defense of Marriage Act (DOMA) may be eligible to participate in a program undertaken by the Attorney General’s Office, the Office of the Comptroller, and the Group Insurance Commission to seek tax refunds from the U.S. Internal Revenue Service (IRS).
State employees who were married to spouses of the same sex, were employed by the Commonwealth between 2010 and 2012, and obtained insurance coverage for their spouse from the Commonwealth during that period are likely entitled to recover overpayments of Federal Insurance Contributions Act (FICA) taxes.
State employees who obtained healthcare benefits for their same-sex spouses paid FICA taxes on the value of those benefits as the result of DOMA. In response to the U.S. Supreme Court’s decision in U.S. v. Windsor striking down DOMA, the IRS established special administrative procedures to assist employers to claim FICA refunds on behalf of their affected employees.
The Commonwealth of Massachusetts, as an employer, is undertaking this effort for affected employees who want the Commonwealth to make FICA refund claims on their behalf. Participation is purely voluntary.
Massachusetts has long fought for the federal government’s equal treatment of all of the state’s marriages, whether same-sex or different-sex, and undertakes this refund effort as a part of that mission. Also, Massachusetts recognizes that the expense to individual employees seeking a refund may be greater than the value of the refund: it is estimated that an affected employee can expect a refund of between $10 and $145 for each year of coverage provided to a spouse.
In order to be eligible to participate in the Commonwealth’s refund process, an employee MUST:
- Have been employed by the Commonwealth for all or part of the years 2010, 2011, and/or 2012;
- Have been married to a spouse of the same sex for all or part of the time the employee was a Commonwealth employee in 2010, 2011, and/or 2012;
- Have covered his or her spouse on the employee’s health insurance through the Group Insurance Commission for all or part of the time the employee was a Commonwealth employee in 2010, 2011, and/or 2012;
- Have not already made a refund claim to the IRS for overpayment of FICA taxes for tax years 2010, 2011, or 2012; AND
- Fill out and return to the Office of the Attorney General the FICA Tax Refund Consent no later than November 18, 2014.
Employees should know that if they elect to have the Commonwealth file a FICA refund claim on their behalf, the Commonwealth, as required by section 31.6051-1(c) of the Employment Tax Regulations, will also file with the IRS Forms W-2c correcting the Forms W-2 originally issued to employees. Employees should be aware that their Old-Age, Survivors, and Disability Insurance (OASDI) and Medicare earnings record will be corrected for the tax periods for which they receive a refund. Employees also should understand that reducing their wages could affect their eligibility or the amount of future OASDI or Medicare benefits. Finally, it is possible that the filing of the Forms W-2c will increase the likelihood of their filings being audited by the IRS.
If you have questions about your eligibility to participate as an employee of the Commonwealth of Massachusetts, please call 617-963-2167 to speak with the Attorney General’s Office.