Tax Error Hurts Yale's Gay Employees

Employees who utilize Yale University's domestic-partner health benefits will have to double up on their taxes this year because of a payroll error related to the federal government's resistance to recognizing same-sex couples.

BY Advocate.com Editors

January 12 2011 2:30 PM ET

Employees who utilize Yale University's domestic-partner health benefits will have to double up on their taxes this year because of a payroll error related to the federal government's resistance to recognizing same-sex couples.

Payroll staffers at the prestigious New Haven, Conn., university were partly confused because Connecticut recognizes gay marriage — and considers even same-sex domestic partners "married" for tax purposes — but the federal government does not. So, while gay partners don't have to pay state income taxes on their Yale health benefits, they are responsible for federal taxes on them, which Yale did not take out of paychecks in 2010.

To make up for it, gay employees will be asked to pay double taxes this year — and specifically make up for all their 2010 health benefit taxes in the first three months of 2011. 

“Unfortunately, the payroll system inadvertently treated those benefits as nontaxable for Connecticut and federal purposes for the entire calendar year of 2010,” said a letter, dated December 22, from Yale’s payroll department to employees with same-sex partners who were affected by the error, reports The New York Times. 

The university is declining to cover the extra taxes, which some corporations are doing now so that gay and straight employees are on a level playing field.

A university spokeswoman said Yale regretted the error and “looks forward to a time when there is a federal recognition of same-sex marriage and civil union rights with respect to tax withholding rules.” 

Read the full story here.

Tags: Business

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