Today, the Human Rights Campaign called on administrators at Yale University to make changes to an accounting policy that has caused extra pain in the pocket for LGBT employees who are in committed relationships. Yale’s payroll department failed to withhold taxes on domestic partner benefits that were disbursed during 2010. Now, the University is now demanding that affected employees repay the tax shortfall within the first three months of 2011. This financial hardship, which is the University’s fault, is a burden that should be absorbed by Yale and not the affected employees.
“The tax penalty on domestic partner health benefits is unjust and the added burden now faced by Yale employees is a clear reminder that equality for all people is not a reality,” said HRC President Joe Solmonese. ”The Yale University administration should help its employees by paying for their mistake and ‘grossing-up’ their wages in the future.”
Institutions of higher learning like Yale often serve as beacons of fairness and equality. Their payroll department’s error on taxes shines a spotlight on the undue burden placed on partners of LGBT workers by the federal government’s failed domestic partner tax policy.
To offset this additional penalty, many businesses and other institutions have begun reimbursing employees for taxes on domestic partner health benefits. This practice, known as “grossing up” is becoming an increasingly popular way to treat LGBT employees equally until changes are made to federal tax policy. In recent weeks, companies like Google, Facebook and Barclays have all announced their decision to “gross up” pay for employees who have enrolled their partners in company benefit programs. HRC tracks companies that have this benefit through the Corporate Equality Index (CEI) survey and provides resources for employees and employers on how to implement grossing up policies.
In addition to grossing up, HRC also supports the Tax Equity for Health Plan Beneficiaries Act. The bill would provide uniform tax treatment for employer-provided health benefits by excluding the value of those benefits from an eligible employee’s income, as it does for benefits provided for an opposite-sex spouse or dependent. HRC has helped to build the Business Coalition for Benefit Tax Equity, a coalition of more than 70 major employers supporting passage of this important legislation.