IRS Back Doors Same-Sex Retirement Benefits in Texas

IRS Back Doors Same-Sex Retirement Benefits in Texas

HOUSTON, Texas — The Obama Administration is attempting to back-door same-sex retirement benefits in conflict with a constitutional amendment passed by Texas voters. The IRS is requiring Texas businesses and non-profits to provide retirement benefits to partners married in states that recognize same-sex marriage. The Houston-Galveston Area Council (H-GAC) which is made up of 13 counties and the cities and school districts within those counties, has received a notice from the IRS that it must provide same-sex partner retirement benefits. The Council is faced with complying with an IRS Revenue Ruling which Board members say compels it to violate state constitutional law governing traditional marriage and awarding benefits to same-sex couples.

IRS Revenue Ruling 2013-17 requires the H-GAC to get 401(k) plans in compliance by December 31, 2014, or H-GAC’s 241 employees risk losing their plan’s tax-qualified status. The IRS Revenue Ruling appears to apply to private businesses, governmental entities and nonprofits – any employer providing 401(k) plans.

Texans overwhelmingly voted (76%) for Proposition 2 in November of 2005. Its passing added language to the Texas Constitution (Article 1 Section 32) that “Marriage in this state shall consist only of the union of one man and one woman.” It also provided “This state or a political subdivision of this state may not create or recognize any legal status identical or similar to marriage.”

On Tuesday, the H-GAC Board will decide its $341 million budget. The H-GAC allocates funds within its 13 county region that come mostly from the state and federal level. The U.S. Pastor Council emailed members of the public informing them of the issue and of the opportunity to sign up to speak at the meeting.

The public is signing up to voice their opposition to changing the language of the 401(k) plans to comply with the IRS Revenue Ruling.  

The Board of Directors of the H-GAC was set to vote on revision of the retirement plan language when it was on the agenda October 21. The agenda item provided for adoption of language for its 401(k) plans that would bring it in compliance with the September 2013 IRS 2013-17 Revenue Ruling and the IRS 2014-19 Notice. Doing so would make the H-GAC retirement plan an approved plan which would allow for tax deferred contributions and other IRS benefits. An approved plan provides for tax exemptions which make the contributions taxable only when the employee withdraws the contribution.

Substantial debate occurred at the H-GAC October 21st meeting. A tape of the Council’s discussion of the issue at the meeting is linked here.

There was a motion and second to approve the agenda item adopting the IRS recommended language. Galveston County Commissioner Ken Clark offered an amendment to defer the item until the next H-GAC meeting.

Commissioner Clark also told fellow Board members:

“My concern is that this particular requirement may fly in the face of state law, which concerns me. If I remember correctly, I thought the Legislature had passed an Amendment to the Constitution and the voters approved it, that defined marriage as between one man and one woman. I am not very comfortable voting for this, I’m not gonna vote for this … I look at this as one of the things that you’ve heard me get up on the soapbox before, that we just can’t continue to let the federal government dictate to us, things that are, things that we would be less than amenable to, and that’s why I will be voting ‘No’ on this issue. Not that I don’t support the plan being qualified. I think it’s very unfortunate that the IRS is using this issue in making, holding our plan hostage, and gonna try to convince all of you to vote for this amendment because they’re using our employees against us in this fashion. These types of issues are pretty hot in the news today, just in a different flavor and I for one am going to stand up and say ‘No.’”

Commissioner Clark told Breitbart Texas that other federal-state clashes have occurred at the Council before on matters involving the EPA and air and water quality, workforce, aging, and other issues.

Board member Commissioner Andy Meyers from Fort Bend County, stated he agreed with Commissioner Clark philosophically. He continued saying he has no problem making decisions where he personally has to suffer consequences but did not want H-GAC employees, and future employees, to suffer. Commissioner Meyers suggested that the Council send a letter to the U.S. Congressmen and Senators representing the geographical area. He stated the Council could express the sentiment of the Board with regard to the IRS’ action.

Commissioner Clark responded that he appreciated his fellow Board member’s comments but continued by saying:

“This is how the decline of the empire happens as we acquiesce to this sort of items little by little and it desensitizes us to it. At some point we’re gonna have to stand up and on this issue I chose to stand up to this because this is not, this is not appropriate for them to hold our employees hostage. And, if they chose to disqualify our plan, it will become a national issue. The American people, in my opinion, are not willing to let this come in incrementally the way this is happening, so that’s where I am at on this issue.” 

Board member County Judge Carolyn Bilski from Austin County told the Commissioner, “I agree with you totally” but asked that the Board consider postponing voting on the language until they had time to do more research. She noted that there was a member of the federal legislature in the audience and she hoped the Board would follow-through on the issue. County Judge Bilski continued “I agree, I have a real hard time with someone that doesn’t represent the people in the IRS making the rulings that are so important and change the face of our society.” The Councilwoman said that she wanted to consult legal counsel and find if there was another way to comply and still meet the needs of the employees.

Board member Oliver Pennington told the Board he believed the Defense of Marriage Act has been overturned by the U.S. Supreme Court. He continued, that “really means that marriages between the same sexes in other states are recognized through-out all the 50 states and it doesn’t have anything to do with our prohibition in Texas against same-sex marriages.” He said he voted for the motion because it just speaks to marriages performed elsewhere and the only way to overturn the decision would be by a federal constitutional amendment.

Commissioner Clark motioned to delay the decision a month because they did not have to comply with the IRS notice until the middle of December. He also said there may be other avenues to address the issue.

Geri Bentley, Councilwoman for League City, Texas, and new member of the H-GAC Board told Breitbart Texas the “IRS is trying to subvert Texas law and I will vote against doing so. This is state law and the issue involves state’s rights. We need to work with our state legislators to see what we can do about this problem.”

Breitbart Texas was told H-GAC Board officers decided not to put the item on the November 18th agenda because the Fifth Circuit is scheduled to hear oral arguments in the Texas and Louisiana same-sex marriage case in early January. 

The Board of Directors of H-GAC is comprised of 35 elected officials who represent the 13 counties, 105 cities, and 14 member independent school districts in the region. The Board meets monthly.

The elected representatives and the entities in the H-GAC General Assembly are linked here. Controversial Mayor Annise Parker is a member of the Board. Mayor Parker, who is openly gay, has been accused of promoting a “gay agenda” through the enactment of the Houston Equal Rights “Bathroom” Ordinance and her executive action in giving benefits to same-sex partners of City of Houston employees.  

Lana Shadwick is a legal analyst and contributing writer for Breitbart Texas. Follow her on Twitter @LanaShadwick2