Massachusetts Same-Sex Marriage Setup (Doc ID 623559.1)

Last updated on JULY 11, 2016

Applies to:

PeopleSoft Enterprise HCM Human Resources - Version 8.8 SP1 to 9.2 [Release 8.8 to 9]
Information in this document applies to any platform.

Symptoms

As a result of a court case in Massachusetts, the state's highest court has ruled that effective 5-17-2004, gay couples will be allowed to marry and that domestic/same sex partners will be treated the same as a Spouse.  What the Massachusetts court has required is not domestic partners and not civil unions, but marriage.

Implementation instructions:
Employers will have to set up separate NON-QUALIFIED benefit plan deductions (see below) for Massachusetts same-sex spouses, who will be "non-qualified dependents" as far as the IRS is concerned, with benefits taxable at the federal level.  Then the benefits can be excluded from Massachusetts taxation by means of (1) tagging the benefit deductions with the "DPB" taxable gross component ID and (2) updating the Massachusetts entry on the Taxable Gross Definition Table.

NOTE: Attached to this Solution are three Word docs-- for releases 8.01, 8.31 and 8.81--with setup examples for a non-qualified medical deduction, and the new 5-17-2004 row for MA in the taxable gross definition table. Customers who are current on tax updates and have Tax Update 2004-C applied will not have to manually add the row to the taxable gross definition table.

This method is how the same type of situation is currently handled in the system for California domestic partners and Vermont civil unions. See the Taxable Gross Definition Table for CA and VT with the taxable gross component ID of DPB.

The reason for this type of setup is the fact that while Massachusetts may recognize same-sex marriages, the IRS does not recognize same-sex marriages for purposes of things like taxable benefits and before-tax deductions.  The payroll system still has to treat these amounts as taxable for federal income tax purposes even if they are no longer taxable for Massachusetts state income tax purposes, and the method for doing this in the system is the Taxable Gross Definition Table.

Cause

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