Sacramento – Assemblymember Philip Y. Ting (D – San Francisco) and San Francisco County Supervisor Mark Farrell announced the introduction of state legislation today, AB 362, to provide tax relief for employees who receive reimbursement from their employer for federal taxes they paid on healthcare benefits provided to their same-sex partner and dependents.
“At the heart of this issue is a question of fairness for same-sex couples,” Ting said. “The federal policy to tax their benefits is discriminatory, and the last thing the state of California should do is make it harder to remedy the injustice by taxing the reimbursement of these costs,” he added.
“Same-sex couples should not be required to pay more income taxes than others simply due to the nature of their partner relationship,” said Farrell. “This legislation will expand on legislation I introduced in City hall for San Francisco, and expand it across California,” he added.
Last November, Supervisor Farrell proposed a measure which, if enacted, would require City/County of San Francisco to reimburse its employees for federal taxes they must pay on benefits provided to a same-sex partner. The federal government assesses taxes on these benefits because it does not recognize same-sex unions. Similar benefits offered to heterosexual couples are not considered taxable. Under current state law, the reimbursements provided by an employer, such as those contemplated in San Francisco, would be considered income to the employee, and subject to taxation by the state of California.
AB 362, authored by Ting, would cover persons in a same-sex partner relationship who work for public entities, such as the City/County of San Francisco, or private sector companies that choose to reimburse their employees for federal taxes they pay on benefits received for their partner and dependents. Among the companies providing this type of reimbursement to employees are Google, Kimpton Hotels and Restaurants and Facebook.
The legislation is sponsored by Equality California. "We can't end DOMA from the statehouse, but we can make sure that California is not part of the problem. Equality California is so pleased to champion this legislation to right the wrong of loving same-sex couples being unfairly taxed," said John O'Connor, Equality California executive director.
Ting and Farrell said that employers who provide this reimbursement to their employees should be applauded for their actions. If passed by the legislature and signed by the Governor, AB 362 would be in effect for the 2014 tax year. AB 362 is sponsored by Equality California.