CT Civil Union Bill Could Affect Employer State Tax Computations

April 21, 2005 (PLANSPONSOR.com) - Connecticut employers may need to change their HR recordkeeping systems to reflect the potential changes in the handling employee benefits under the state's new civil union law.

Benefits consultant Andrew Sherman, a senior vice president at the Segal Company, said the differences will come in the tax treatment of both salary and benefits at the state level since federal law doesn’t recognize domestic partners or civil unions.

Because the Connecticut measure, signed into law Wednesday by Governor M. Jodi Rell, extends the same rights and privileges of marriage to members of a same-sex couple in a civil union, affected employees may have to adjust their state salary tax withholding. The new law extends to gay couples the rights and responsibilities married couples have under 588 state statutes, including the right to file a joint tax return.

Employers need to be particularly careful about any potential tax impact on their current benefits policy since domestic partners will be hit with state taxes differently than those in a civil union, Sherman said. The key issue is the state tax treatment of employer-paid benefits extended to the employee’s relationship partner; the benefits are considered income if the couple is in a domestic partner arrangement, but not if they are married or in a civil union.

Rell, a Republican, signed the bill about an hour after it was approved 26-8 by the Democrat-controlled Senate, according to news reports. The law, which takes effect October 1, includes an amendment that defines marriage as being between a man and a woman, which observers said made the measure more politically palatable for Rell to sign into law.

“I have said all along that I believe in no discrimination of any kind and I think that this bill accomplishes that, while at the same time preserving the traditional language that a marriage is between a man and a woman,” Rell told reporters.

According to the 2000 census, there are 7,400 same-sex couples in Connecticut.

Domestic Partner Benefits in DC

In related news, a leading US Senate Republican warned District of Columbia Mayor Anthony Williams on Wednesday that a move to recognize gay marriages in the nation’s capital would trigger a sharp Congressional backlash, according to a Washington Post report. Williams acknowledged that the District could jeopardize its budget agenda and domestic partner benefits if it mishandles the issue.

Kansas Senator Sam Brownback the new chairman of the Senate Appropriations subcommittee on the District, said he wanted to hear more from Williams but opposed a statement by the city’s attorney general that “validly married same-sex couples” may file joint DC tax returns


“I was hopeful we weren’t going to be confronting this issue. But it appears there will need to be a review and a discussion,” said Brownback, according to the Post.

Across the nation, 40 states, including Virginia and Maryland, ban recognition of gay marriages or define marriage as the union of a man and a woman, according to Human Rights Campaign, a gay advocacy organization.

The District, which has a higher percentage of same-sex couples living together than any US city after San Francisco, according to gay rights groups, also fought 10 years to get Congress to approve its domestic partner benefits program, according to the news report.