Bill Introduced to Resolve Tax Conflict for Same-Sex Partner Benefits in Colorado

We previously reported on the Colorado Department of Revenue’s efforts to draft emergency regulations to resolve the conflict created by Colorado’s constitutional prohibition against same-sex marriage and recent IRS guidance on how same-sex couples are to file their federal income taxes. Colorado’s constitutional prohibition requires employers to impute income on the value of qualified benefit plans provided to civil-union partners, while IRS guidance directs same-sex couples married in jurisdictions recognizing same-sex marriage to file federal income taxes as married filing separately or married filing jointly, in spite of where they reside and work. See the previous Hot Topics article here.

Now, the Colorado Legislature has gotten involved. Senate Bill 14-109 was introduced in an attempt to resolve the conflict for civil-union partners, who are married or who get married in a jurisdiction recognizing same-sex marriage. The bill, as introduced, requires any two taxpayers who may legally file a joint federal income tax return to file separate state income tax returns if they file separate federal income tax returns and to file a joint state income tax return if they file a joint federal income tax return. While this legislation still has a long way to go, it suggests one resolution to the conflict by replacing references to husband and wife in Colorado income tax guidance with language referring to federal tax filing status.

Consult your tax advisor for specific direction on how tax laws may affect your company benefit plans. Follow the bill’s progress on the Colorado General Assembly’s website by clicking here.