In a notice issued this week (Notice 2013-61), the IRS established special procedures for employees with same-sex spouses and their employers to correct overpayments of income and FICA taxes attributable to the employees’ status as married persons. These procedures implement the IRS’s recently-adopted position (see Revenue Ruling 2013-17) that same-sex individuals who are married in a state or foreign jurisdiction that recognizes the marriage are considered married for federal tax purposes. Prior to the issuance of Revenue Ruling 2013-17, employees with same-sex spouses, and their employers, typically paid federal income and FICA taxes in connection with certain employee benefits that they would not have paid if the employees’ status as married persons was legally recognized.
Notice 2013-61 adopts the following two special administrative procedures that allow employers to seek refunds or adjustments for employment taxes paid in 2013:
Employers may use the fourth quarter employment tax return to correct FICA overpayments for the first three quarters of 2013. To obtain a refund for income taxes that were withheld during 2013, employers should reduce their fourth quarter income tax withholding.
Employers may wait until after the end of 2013 and then seek a FICA correction for the entire 2013 calendar year using an amended return for the fourth quarter of 2013.
For any pre-2013 year that is open under the statute of limitations, employers may make FICA corrections for the entire year using an amended employment tax return for the fourth quarter of that year. The statute of limitations for each calendar year generally closes three years after the following April 15, so 2010, 2011, and 2012 are currently open. Importantly, an employer seeking refunds of FICA taxes for past years must reimburse the employee for the over-withheld tax and obtain a written assurance from the employee that the employee has not sought a refund independently. Employers are also required to file corrected Forms W-2 to report amounts that have been adjusted or refunded. This will help employees to claim refunds for overpaid income taxes.