Same-Sex Union Developments in Rhode Island and New YorkAugust 23, 2011 — 1,856 views
Same-sex couples in Rhode Island may now enter into civil unions after a law legalizing the unions was signed into law by Governor Lincoln Chafee on July 2, 2011. The law grants the partners "all the rights, benefits, protections, and responsibilities under law, whether derived from statutes, administrative rules, court decisions, the common law, or any other source of civil or criminal law" as married spouses.
Civil unions are already legal in New Jersey and Illinois and will become legal in Delaware and Hawaii on January 1, 2012. Civil unions were legal in Connecticut, New Hampshire and Vermont prior to the legalization of same-sex marriage in these states. Connecticut and New Hampshire automatically converted all civil unions to same-sex marriages. Vermont continues to recognize civil unions entered into prior to September 1, 2009, the date on which same-sex marriage became legal in that state.
The right to marry has been extended to same-sex couples in New York now that the Marriage Equality Act took effect on July 24, 2011. The Act requires that "[n]o government treatment or legal status, effect, right, benefit, privilege, protection or responsibility relating to marriage, whether deriving from statute, administrative or court rule, public policy, common law or any other source of law, shall differ based on the parties to the marriage being or having been of the same-sex rather than a different sex."
The New York State Department of Taxation and Finance issued guidance on July 29, 2011 clarifying the effect that the Marriage Equality Act will have on state tax laws. The guidance confirms the change in state tax treatment of employer-provided benefits for a same-sex spouse. Previously, the New York tax code tracked the federal tax code in requiring that the value of employer-provided coverage for a same-sex spouse be recognized as a taxable benefit, unless a same-sex spouse qualifies as a tax dependent. The Marriage Equality Act equalized the tax treatment of spousal benefits, such that the value of employer-provided benefits for a same-sex spouse will no longer be taxable to an employee for New York income tax purposes. In addition, employees may pay premiums for a same-sex spouse's coverage on a pre-state tax basis. Despite these changes in state law, benefits for a non-dependent same-sex spouse continue to be taxable for federal income tax purposes and premiums for the same-sex spouse's coverage must be paid on an after-tax basis for federal income tax purposes.
Same-sex marriage is already legal in Connecticut, Iowa, Massachusetts, New Hampshire, Vermont and Washington D.C. In addition, California continues to recognize same-sex marriages performed between June 16 and November 4, 2008, the period during which same-sex marriage was legal there.
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Employers located in a state where a form of same-sex union has been legalized or with employees who may travel to one of these states to enter into a same-sex union should review their benefit plans in order to assess their options and obligations with respect to providing benefits for same-sex spouses and partners. The laws impacting benefits for same-sex spouses and partners can be complex and are likely to become more complex in the coming years. Employers will need to take steps to understand and prepare for the potentially conflicting federal and state tax consequences of offering certain benefits to same-sex spouses and partners.
Todd A. Solomon is a partner in the Employee Benefits practice group of McDermott Will & Emery's Chicago office. He is the author of the third, fourth and fifth editions of Domestic Partner Benefits: An Employer's Guide, and was the co-author of the book's first and second editions.