NY Court Rules For Same-Sex Marriage

June 14, 2004 (PLANSPONSOR.com) - The Justice Court in New Paltz New York has come out with a ruling in favor of same-sex marriages in the Empire State.

>The New York state court said denying same-sex couples the right to marry would violate equal protection measures in the state’s constitution.   The ruling came as the court threw out charges that the town’s mayor, Jason West, violated the law by marrying dozens of gay couples in February without licenses, according to an Associated Press report.

“None of the reasons stated in opposition to same-sex marriage is paramount to the equal protection guarantees enshrined in the state and federal constitutions,” Judge Jonathan Katz said in his ruling.

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Joshua Rosenkranz, the attorney representing West saw the court’s decision as monumental in the gay and lesbian rights movement.   “This marks the first official step in the march toward full equality for gays and lesbians in New York state ,” Rosenkranz told the AP. “It is the first time that any court in this state has declared that same-sex couples have the same rights, same status, and same dignity as every other citizen.”

A spokeswoman for New York Attorney General Eliot Spitzer told the AP, “We are reviewing the decision.”

While the decision appears to be a clear cut victory for same-sex marriage proponents, the case will ultimately wind up in New York Supreme Court, a process that could take up to two years.    Earlier this year, California’s Supreme Court halted same-sex marriages in San Francisco and is now considering the matter (See  CA Supreme Court Puts Gay Marriage on Hold… For Now ). Additionally, Multnomah County Circuit Judge Frank Bearden ordered the Oregon’s largest county to stop issuing marriage licenses to same-sex couples (See  Judge Halts Oregon Same-Sex Marriages ).

"Advance Reimbursements" and "Loans" For Uninsured Medical Expenses Are Gross Income: IRS

December 30, 2002 (PLANSPONSOR.com) - The Internal Revenue Service (IRS) has released Revenue Ruling 2002-80, stating any amount paid to employees as an "advance reimbursement" or "loan" for uninsured medical claims is not excluded from gross income under section 105(b) of the IRS Tax Code.

All monies given to an employee as an “advance reimbursement” or “loan” are counted as gross income, and thus should have the appropriate employment taxes withheld, regardless if the employee incurred any uninsured medical expenses during the year.

The revenue ruling examined two possible scenarios an employer might encounter when determining the proper way to handle “advance reimbursements” or “loans.”

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Scenario One

An employer provides health coverage to its employees providing for accident or health coverage through a group health insurance policy.

The employer automatically deducts the cost of the coverage from its employees enrolled in the insurance, thereby applying the salary reduction amounts to the payment of the premiums for the group health insurance policy for the employee during the year.

To restructure the salary reduction for the group health insurance policy, the employer makes payments to an employee in amounts that cause the employee’s after-tax pay from the employer to be the same or approximately the same as what it would have been if there were no salary reductions to pay premiums for the group health insurance policy. These payments would be characterizes as “advance reimbursements” of the uninsured medical expenses.

Even though the payments are made as an “advance reimbursements” for payments to an uninsured medical expenses, those amounts are paid to the employee regardless of whether the employee incurs expenses for medical care or suffers a personal injury or sickness during the year.

The employers “advance reimbursement” plan is therefore not an accident or health plan because it is not an arrangement for the payment of amounts to employees in the event of personal injuries or sickness.

In addition, the exclusion from gross income under Section 105(b) applies only to amounts paid specifically to reimburse medical care expenses and does not apply to amounts that the employee would be entitled to receive regardless of whether or not the employee incurs expenses for medical care.

Any amount the employee received for uninsured medical expenses given in the “advance reimbursement” should be treated as additionally compensation with the proper tax withholdings taken from the employee’s gross wages.

Scenario Two

Similar facts as the first scenario, only the employer reimburses an employee’s health insurance premiums through “loans” rather than “advance reimbursements.” Although the employer characterizes the payments to the employee as “loans,” it is understood that the employee will never become obligated to repay any of the “loans”. Under this plan, when the employee submits uninsured medical claims, the employer treats the reimbursements as an offset against that amount of the “loans.”

The plan is implemented by making “loans” to the employee sufficient to cause the employee’s after-tax pay to remain essentially unchanged. The “loans” only become due and payable at the time the employee submits claims for uninsured medical expenses.

Again, the exclusion from gross income under Section 105(b) applies only to amounts paid specifically to reimburse medical care expenses and does not apply to amounts that the employee would be entitled to receive regardless of whether or not the employee incurs expenses for medical care.   Proper withholding should be taken out of the employee’s gross wages for the full amount of the loan.

A full text of the Revenue Ruling can be found at  http://www.irs.gov/pub/irs-irbs/irb02-49.pdf .

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