§ 36-12-15 - Domestic partner income loan program. [Repealed effective August 15, 2010.].
SECTION 36-12-15
§ 36-12-15 Domestic partner income loanprogram. [Repealed effective August 15, 2010.]. – (a) Legislative findings: The general assembly hereby finds that:
(1) The department of administration is responsible for theadministration of state health care benefits programs for state employees;
(2) In 2001, the general assembly amended § 36-12-1 toallow for the provisions of health care benefits for domestic partners of stateemployees;
(3) The state was only recently advised that said amendmentresulted in certain unanticipated federal tax implications for some stateemployees;
(4) Under federal tax law, the fair market value of healthinsurance coverage for domestic partners of state employees is considered to beimputed income to affected state employees unless said domestic partnerotherwise qualifies under applicable federal laws and regulations as the stateemployee's dependent for health care purposes;
(5) Because said tax ramifications were unanticipated, thestate did not inform the affected employees of those ramifications untilNovember 2005;
(6) Under applicable state and federal tax law taxpayers areresponsible for paying the amounts of any underpayments of state and federalincome taxes;
(7) Affected employees are required to file their 2005 stateand federal income tax returns on or before April 15, 2006; and
(8) In order to pay the additional income tax owed as aresult of the imputed income from the receipt of health care benefits for theirdomestic partners, some affected employees may require financial assistance.
(b) There is hereby created a separate account within thedepartment of administration which shall be known as the Domestic PartnerIncome Tax Loan Account (2002-2005), hereinafter known as the ("Account"). Theaccount is created in order that the state of Rhode Island, through thedepartment of administration, can develop and implement an interest-free loanprogram to loan funds to eligible state employees so that employees can pay theadditional federal and state income taxes incurred for the tax years 2002,2003, 2004 and 2005, as a result of income imputed to them equal to the fairmarket value of the health care benefits extended to their domestic partners.The state controller is hereby authorized to advance from the general fund thenecessary funds for disbursement of loan amounts to eligible employees asprovided herein.
(c) Such loans shall be repaid by the affected employeesthrough payroll deductions in accordance with the requirements of the DomesticPartner Income Tax Loan Account Program, hereinafter known as the ("Program"),as follows:
(1) Only one such loan will be extended to an employee;
(2) No loans will be granted after August 15, 2006;
(3) Loans will only be extended to current employees of thestate who have signed a promissory note and have committed to full repaymentthrough payroll deduction;
(4) Loans will not be extended to employees who are on anytype of leave if the employee does not have bi-weekly pay sufficient to coverthe necessary payment;
(5) Loans will only be extended to those employees who owemore than a total of five hundred dollars ($500) in state and federal taxes asa result of the extension of state health care benefits to an employee'sdomestic partner for the tax years 2002, 2003, 2004, and 2005;
(6) The maximum amount of each loan shall be six thousanddollars ($6,000) or the total amount of state and federal taxes owing due tothe underreporting of taxable imputed income from the extension of state healthcare benefits to domestic partners of state employees during the tax years2002, 2003, 2004, and 2005, whichever is less. Provided, however, the maximumloan amount for the 2005 tax year shall be the 2005 imputed income from thebenefits times the effective tax rate for the filer for 2005, which iscalculated as tax liability divided by adjusted gross income. Provided further,the 2005 loan amount shall be reduced by the total amount of any 2005 federaland state estimated tax refunds.
(7) For payment of federal taxes owing, the state will issuethe check payable to the IRS and the employee. The employee shall beresponsible for submission of the check, along with the amended return, to theIRS;
(8) For payment of state taxes owing, the state will issuethe check payable to the Rhode Island division of taxation and the employee.The employee shall be responsible for submission of the check, along with theamended return, to the division of taxation;
(9) If after receiving such a loan an employee does not havesufficient funds in his/her bi-weekly pay to pay the loan payment, the employeewill be responsible for repayment to the Program with repayment made on orbefore the date the deduction would have been made from his/her bi-weekly pay.If payment is not promptly remitted, the promissory note will immediatelybecome due and payable in full;
(10) The loan repayment schedule will consist of thefollowing maximum repayment periods:
(i) For loan amounts greater than five hundred dollars($500), and less than or equal to one thousand dollars ($1,000): the maximumrepayment period is one year;
(ii) For loan amounts greater than one thousand dollars,($1,000), and less than or equal to two thousand dollars ($2,000): the maximumrepayment period is two (2) years;
(iii) For loan amounts greater than two thousand dollars($2,000), and less than or equal to three thousand dollars ($3,000): themaximum repayment period is three (3) years;
(iv) For loan amounts greater than three thousand dollars($3,000), and less than or equal to six thousand dollars ($6,000): the maximumrepayment period is four (4) years.
Notwithstanding the above employees may voluntarily elect ashorter repayment period.
(11) The minimum loan payment amount will be calculated bydividing the qualifying amount set forth in subdivision (c)(6) above by thenumber of pay periods in the applicable repayment period set forth insubdivision (c)(10) above.
Notwithstanding the above employees may voluntarily elect ahigher monthly repayment amount.
(12) If the employee does not remit a payment when due, andthe state commences legal action through suit or otherwise to collect the sameor a portion thereof, the state shall be entitled to collect all reasonablecosts and expenses of suit, including, but not limited to, reasonableattorney's fees;
(13) If an employee leaves state employment, any outstandingloan amount will become due and payable at the date of termination. Any amountowed for the employee's unused vacation, sick, and personal time shall beapplied toward payoff of the loan.
(14) Additionally, an employee may elect to discharge accruedvacation time in exchange for the state paying a portion or the entire amountowed to the IRS and/or state division of taxation. An employee who wishes toexercise this option must inform the state controller in writing of the numberof accrued vacation hours he/she wishes to discharge. The controller will firstdeduct the required taxes from the value of the vacation hours, and will thenauthorize payment of the remaining funds to the IRS and/or the division oftaxation on behalf of the employee. This option is available through August 15,2006, and is available only once to an employee. In the event that an employeedischarges such accrued vacation time, the value of such vacation time shall bededucted from the maximum loan amount in paragraph (6) above.
(ii) In addition, in December 2006 and thereafter eachDecember until the year 2009, and in order to reduce the outstanding amount ofthe loan that is owed to the state, an employee with an outstanding domesticpartner loan amount may elect to discharge vacation time accrued by theemployee during that calendar year. An employee who wishes to exercise thisoption must notify the state controller in writing by December 1 of the numberof accrued vacation hours he/she wishes to discharge for loan repayment thatyear. Upon approval the controller will first deduct the required taxes fromthe value of the vacation hours accrued, and will then deduct the remainingamount from the outstanding amount of the loan. Provided, however, this optionis available only to those employees who had discharged the full amount oftheir accrued vacation before the inception of their loan.
(d) All amounts repaid under the terms of the program shallbe promptly remitted to the Domestic Partner Income Tax Loan Account in thegeneral fund.
(e) Beginning in January 2007, and in each January thereafteruntil the loans are repaid in full, the department of administration shallsubmit a report to the chairpersons of the house and senate finance committeeswhich shall describe, as of December 31 of the previous year, the number ofstate employees that continued to participate in the program, the number anddollar amount of loans outstanding, and the total receipts from payrolldeductions that have been transferred to the general fund during the priortwelve (12) month period.
(f) For purposes of the Program, the term "employee(s)" shallinclude employee(s) of other state agencies for which the department ofadministration purchased health care coverage during the period 2002-2005.