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Late Proof of Marriage


mdm09

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I'm not sure this is a cafeteria plan issue--I think it might be more of a straight tax issue. In any event, the situation is as follows:

Employee covers domestic partner on health plan and pays for domestic partner benefits on an after-tax basis. Employee produces marriage certificate indicating that the employee and domestic partner married two years ago. Does the employer have to change the tax treatment of the amount paid for the domestic partner/spouse's coverage, and if so as of when (date certificate was produced, beginning of year, back to the date of marriage)?

Anyone have any insight? Obviously this is not a permitted election change event under the cafeteria plan rules, as the marriage happened two years ago. Thank you!

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  • 3 weeks later...

I wouldn't go back and correct two years of W2s just because the employee chose to wait two years to report his marriage. I say just correct the taxes in the current year, for the current year, and move on. If the employee wants to go back two years and amend his tax returns to account for the rest of it, just provide him with the relevant figures (amount he was imputed for ER contributions and the total of his post-tax contributions from the date of the marriage through 12/31/15) and send him to H&R Block to fix it himself.

W2-Cs are for reporting errors on a previously filed W2-C. I wouldn't consider this an error needing correction on the employer's part. The employee certified this person as a domestic partner, not a spouse, and you taxed him accordingly. He didn't report the marriage until now so therefore you didn't make an error on his W2. That's for him to fix.

For 2016, though, I would definitely suggest correcting for the entire year - not just from the date he reported the marriage forward. There is still plenty of time left in the year to correct everything for this year before 12/31. If you only correct going forward, you are knowingly deducting him for taxes he does not owe.

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Many thanks to you both. I should have mentioned this in the original post, but the employee and partner/spouse are opposite-sex, not same-sex. Therefore, I thought the IRS guidance on same-sex marriages was inapplicable. (I considered using it as guidance but in the end decided the issues were too disparate.) I agree with you both about the approach to take if the employee and spouse/partner were same-sex.

In the end I think the better choice in this situation is probably not to allow a change in the coverage from domestic partner to spouse until the start of the next plan year, because the pre-tax nature of a benefit is the essence of a cafeteria plan election and the Service has said (albeit in informal comments) that an employee's mistake as to the tax treatment of a benefit is not grounds to change a cafeteria plan election. Of course, if before the start of the new plan year the employee experiences a change in status that would allow a change under the cafeteria plan rules then the change would be allowed.

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