In the wake of the U.S. Supreme Court’s decision in U.S. v. Windsor and supplemental guidance in Revenue Ruling 2013-17, the Internal Revenue Service has issued Notice 2013-61, providing optional special administrative procedures to correct overpayments of employment taxes in connection with an employee’s wages attributable to health coverage provided to a same-sex spouse.
Under the special procedures, employers may streamline the correction process by:
- Using the fourth quarter 2013 Form 941 to correct overpayments of employment taxes for the first three quarters of 2013; or
- Filing one Form 941-X for the fourth quarter of 2013 to correct overpayments for all quarters of 2013.
An employer may also file Form 941-X for the fourth quarter of each calendar year prior to 2013 for which the period of limitations has not expired. The period of limitations is three years and is normally measured from the date the return is filed. A Form 941 filed for any period ending with or within a calendar year before April 15 of the succeeding year is deemed filed on April 15 of the succeeding year. If the return is filed after April 15 of the succeeding year, then the period is three years from the date the return is filed. Therefore, employers who timely filed generally may now use the special procedures to correct overpayments for calendar years 2010 through 2012. The normal procedures require a separate Form 941-X for each calendar quarter for which a refund claim is made.
Employers electing to use the special administrative procedure are subject to the normal requirements that apply when correcting overpayments, including, but not limited to, filing Forms W-2C (applicable to prior years for which the period of limitations has not expired) and repaying or reimbursing employees for the overwithheld taxes. However, employers are not required to use the special administrative procedure and may make corrections under the normal procedures.