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Illinois Reverses Position on Income Tax Treatment of Benefits for Civil Union Partners

by Elizabeth A. Savard, Todd A. Solomon and Brian J. Tiemann The Illinois Department of Revenue recently issued guidance reversing its position on the state income tax treatment of benefits for non-dependent civil union partners. Federal law excludes amounts that an employer pays toward medical, dental or vision benefits for an employee and the employee’s spouse or dependents from the employee’s taxable income.  However, because civil union partners are not recognized under federal law, employers that provide these same benefits to employees’ civil union partners must impute the fair market value of the coverage as income to the employee that is subject to federal income tax, unless the civil union partner otherwise qualifies as the employee’s “dependent” pursuant to Section 152 of the Internal Revenue Code. The Illinois Department of Revenue previously indicated that Illinois would follow the federal approach in taxing the fair market value of...

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IRS Announces Employee Benefit Plan Limits for 2012

by Raymond M. Fernando, Diane M. Morgenthaler and Adrienne Walker Porter The IRS recently announced the 2012 cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans.  Plan sponsors should update payroll and plan administration systems for the new 2012 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.  Also, because 2012 marks the first year that the IRS has increased employee benefit plan limits since 2009, plan sponsors may want to consider updating plan documents to include the new cost-of-living adjustments, to the extent such adjustments are not automatically incorporated by cross-reference.  Please click here for a full list of the 2012 IRS limits.

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