@Sonee8888 wrote:
Can you tell me when this became a federal tax law?
Not exactly. It has been the law probably forever that everything provided to an employee in return for their services is taxable wages. This includes things like gift cards, incentives, and personal use of a company car, among other things. (At my old employer, I got a $100 incentive for completing some healthy lifestyle activities, that's taxable income. My ex-wife got a gift card from the grocery store chain she worked for to buy flowers or food for her mother's funeral, that's taxable income. If you are allowed to use a company owned car for personal use on the weekends, the value of that personal use is added to your W-2 as taxable income.)
This applies to anything of value provided to the employee except for certain fringe benefits as described in publication 15-B. Benefits that do not have to be taxed include company-paid medical insurance, company-paid parking, certain dependent care benefits, and a few other things, but only if the benefit is provided to the employee, their spouse, or their tax dependents (usually children, but not always). If the company provides a benefit to someone who is not the employee, their spouse or their dependent, because of the employee's service, the value must be included in the employee's taxable income.
Here's an article.
https://www.psfinc.com/articles/domestic-partner-benefits-and-imputed-income/
Now, there were some complications prior to the Supreme Court Obergefell decision legalizing same sex marriage. Some states created "domestic partnerships" (starting with CA in 1999) that would allow state tax and other benefits for same-sex partners who registered as domestic partners. This created conflicts between state and federal law, and between states that had DP laws and states that didn't. I honestly can't tell you if the IRS granted exceptions to the rules about taxable benefits for DPs in states that allowed DPs, because I haven't followed the issue that long. The IRS itself has a complicated history with domestic partnerships. In 2006, they ruled that California taxpayers who were in DPs could not file as married under the community property laws, and then reversed themselves in 2010 and said that couples in DPs must follow community property rules on their tax returns.
What is clear is that the rules became crystal clear after the Supreme Court Obergefell decision in 2015. Because that decision legalized same-sex marriage in all 50 states, the tax law is now easy to apply. If a couple is married (same sex or hetero), then the employer can provide tax-free benefits to the spouse. If a couple is not legally married (same sex or hetero) then the employer can't provide tax-free benefits to the employee's partner unless the partner is also a tax dependent of the employee. The fact that any two people can now legally marry, removes the need for special tax treatment of unmarried couples, regardless of whether or not they register as DPs.
