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Date: November 3, 2011
Amendments noted in Red

Bulletin Number: 1100

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Subject

New Imputed Income Earnings Codes for Health Benefits provided to a married employee’s same-sex spouse.

Purpose

To inform agencies of the new Earnings Codes to be used by the NYS Department of Civil Service to process imputed income transactions for the value of the employer contribution for health insurance benefits provided to an employee’s same-sex spouse.

Affected Employees

Employees currently participating in, or who later elect to enroll their same-sex spouse in the New York State Health Insurance Plan (NYSHIP).

Effective Date(s)

Paychecks dated November 17, 2011 (Institution)
Paychecks dated November 23, 2011 (Administration)   
  

OSC Actions

The Marriage Equality Act signed into law on July 24, 2011 as Chapters 95 and 96 of the Laws of 2011 creates equal rights to enter into marriage, regardless of gender, and applies to all legally performed marriages, whether or not the marriage took place in New York State.  

The Marriage Equality Act impacts the State of New York’s business processing of employment tax withholding specifically with regard to Imputed Income.

Imputed Income was previously defined as the taxable value of employer provided health benefits to an employee for a domestic partner.  Historically, marriages between same-sex couples were treated as domestic partnerships, and the employer provided value of the health insurance benefits offered to the same-sex spouse was taxable for all Federal, State, and Local taxes.  Due to the passage of this law, the value of health insurance benefits imputed to the same-sex spouse of any employee shall continue to have Federal tax withholding applied to this benefit but shall not have New York State and local tax withholding applied to this benefit.   

OSC has established two (2) new earnings codes to process these health insurance transactions.   The narrative description and the amount will appear on the employee’s paycheck or direct deposit advice statement.

   CODE                 DESCRIPTION
     IRM           Imputed Income - No. State Taxes
     ISM           Imputed Inc - No State Taxes Adj

The transaction amounts will be subject to Federal, Social Security and Medicare taxes only. 

OSC will process a weekly input file from the NYS Department of Civil Service to start, cancel or change rates for individual employees.   

Agencies will not have the ability to modify these transactions.

To facilitate the conversion of imputed income retroactively back to the effective date of the Marriage Equality Act and to ensure accurate taxation and adjustment, eligible  employees  will see the following on their paycheck or direct deposit advice:

  1. The termination of the current Imputed Income Regular (IIR) Earnings Code, if any, for Domestic Partner.
  2. The addition of the new Imputed Income-No State Taxes (IRM) Earnings Code and amount.
  3. A negative adjustment Imputed Income Special (IIS) to reduce any Imputed Income associated with an employee's record after July 24, 2011 that was applied under any IIR or IIS earnings code.
  4. A positive adjustment of Imputed Inc- No State Taxes Adj
    (ISM) to correctly associate any imputed income after July 24, 2011 with the correct taxation.

Agency Actions

Agencies should refer to this bulletin to answer questions related to the new Earnings Codes.

Questions

Questions regarding Domestic Partner Health Benefits, should be directed to the NYS Department of Civil Service at  (518) 457-5754 (Albany Area) or 1 (800) 833-4344 (outside Albany Area).   This line is operational Monday thru Friday 9:00 am to 3:00 pm EST.

Questions regarding this bulletin may be e-mailed to the Tax and Compliance mailbox.