Benefit TAX Memo.HRC
To:
Human Relations Commission
From
:Carmen Atilano, Manager, Community Relations and Human Rights
Date:
November 7, 2011
Subject:Federal Tax on Same-Sex Couples Health Benefits
SUMMARY
The HRC has received a request from Out Boulder, alocal GLBT organization, to
consider a recommendation to City Manager and City Council to address thetax
issue on same-sex couple health benefits. Specifically, Out Boulder recommends
that the city of Boulder provide same-sex couples with one partner employed by
the City a compensation for the additional tax incurred by the couple. Its intent is
to achieve equitable benefits for all employees.
Under the existing federal tax code,health benefits for same-sex domestic partners
(unlike those of heterosexualspouses of employees)are taxed as income to the employee.
For these employees, the monetary value of the benefit is reported to the IRS as
additional income. This additional income, referred to as imputed income, is subject to
federal, state, and FICA taxation.
Out Boulder’s request canbe addressed through local administrative and/or legislative
approaches.At the administrative level, the City Manager’s role is to determine internal
policy regarding employee compensation and benefits. At the legislative level, the HRC
can recommend to City Council specific legislation to alleviate problems of human
relations or to promote better human relations.
BACKGROUND
U.S. Congress is currently considering The Tax Parity for Health Plan Beneficiaries Act
proposed by Rep. Jim McDermott (D-Seattle). This act is intended to achieve tax equity
for same-sex couples and has gotten support from 77 of the nation’s largest companies,
including Microsoft, Boeing and Alaska Airlines. Under the umbrella organization
named the Business Coalition for Benefits Tax Equity, they have stated that the current
tax inequity puts them at a competitive disadvantage.
Support for this legislation is consistent with previous HRC recommendation to Council
furthering the rights of all people regardless of their sexual orientation or gender variance
status.
On May 18, 2004, Boulder’s City Council adopted Resolution No. 947. This resolution
affirms the city’s commitment to the protection of civil rights for all people as outlined in
the city’s human rights ordinance. Furthermore, the resolution recognized the many
contributions that the city’s gay, lesbian, bisexual and transgender residents have
provided that have enhanced the lives of all in the community. Finally, the resolution
declared support for repealing or legislatively challenging the Colorado state law
prohibiting the issuance of same sex marriage licenses.
NEXT STEP
Does the HRC wish to recommend to Boulder City Council the following legislative
action?
SUPPORT FOR TAX PARITY FOR HEALTH PLAN BENEFICIARIES ACT
The city of Boulder has been, and remains, committed to the protection of civil
rights for all people. It believes that employees who are in committed same-sex
relationships are fully equal to other employees. It supports the Tax Parity for
Health Plan Beneficiaries Act proposed by Rep. Jim McDermott (D-Seattle). Under
the existing federal tax code,health benefits for same-sex domestic partners (unlike
hose of heterosexual spouses of employees)are taxed as income to the employee.
This act is intended to achieve tax equity for same-sex couples and has gotten
support from 77 of the nation’s largest companies, including Microsoft, Boeing and
Alaska Airlines. Under the umbrella organization named the Business Coalition for
Benefits Tax Equity, they have stated that the current tax inequity puts them at a
competitive disadvantage.
Attachments:
Tax Parity for Health Plan Beneficiaries Act
Resolution No. 947