2009 Rhode Island Code
Title 36 - Public Officers and Employees
CHAPTER 36-12 - Insurance Benefits
§ 36-12-15 - Domestic partner income loan program. [Repealed effective August 15, 2010.].

SECTION 36-12-15

   § 36-12-15  Domestic partner income loan program. [Repealed effective August 15, 2010.]. – (a) Legislative findings: The general assembly hereby finds that:

   (1) The department of administration is responsible for the administration of state health care benefits programs for state employees;

   (2) In 2001, the general assembly amended § 36-12-1 to allow for the provisions of health care benefits for domestic partners of state employees;

   (3) The state was only recently advised that said amendment resulted in certain unanticipated federal tax implications for some state employees;

   (4) Under federal tax law, the fair market value of health insurance coverage for domestic partners of state employees is considered to be imputed income to affected state employees unless said domestic partner otherwise qualifies under applicable federal laws and regulations as the state employee's dependent for health care purposes;

   (5) Because said tax ramifications were unanticipated, the state did not inform the affected employees of those ramifications until November 2005;

   (6) Under applicable state and federal tax law taxpayers are responsible for paying the amounts of any underpayments of state and federal income taxes;

   (7) Affected employees are required to file their 2005 state and federal income tax returns on or before April 15, 2006; and

   (8) In order to pay the additional income tax owed as a result of the imputed income from the receipt of health care benefits for their domestic partners, some affected employees may require financial assistance.

   (b) There is hereby created a separate account within the department of administration which shall be known as the Domestic Partner Income Tax Loan Account (2002-2005), hereinafter known as the ("Account"). The account is created in order that the state of Rhode Island, through the department of administration, can develop and implement an interest-free loan program to loan funds to eligible state employees so that employees can pay the additional 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 fair market value of the health care benefits extended to their domestic partners. The state controller is hereby authorized to advance from the general fund the necessary funds for disbursement of loan amounts to eligible employees as provided herein.

   (c) Such loans shall be repaid by the affected employees through payroll deductions in accordance with the requirements of the Domestic Partner 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 the state who have signed a promissory note and have committed to full repayment through payroll deduction;

   (4) Loans will not be extended to employees who are on any type of leave if the employee does not have bi-weekly pay sufficient to cover the necessary payment;

   (5) Loans will only be extended to those employees who owe more than a total of five hundred dollars ($500) in state and federal taxes as a result of the extension of state health care benefits to an employee's domestic partner for the tax years 2002, 2003, 2004, and 2005;

   (6) The maximum amount of each loan shall be six thousand dollars ($6,000) or the total amount of state and federal taxes owing due to the underreporting of taxable imputed income from the extension of state health care benefits to domestic partners of state employees during the tax years 2002, 2003, 2004, and 2005, whichever is less. Provided, however, the maximum loan amount for the 2005 tax year shall be the 2005 imputed income from the benefits times the effective tax rate for the filer for 2005, which is calculated as tax liability divided by adjusted gross income. Provided further, the 2005 loan amount shall be reduced by the total amount of any 2005 federal and state estimated tax refunds.

   (7) For payment of federal taxes owing, the state will issue the check payable to the IRS and the employee. The employee shall be responsible for submission of the check, along with the amended return, to the IRS;

   (8) For payment of state taxes owing, the state will issue the check payable to the Rhode Island division of taxation and the employee. The employee shall be responsible for submission of the check, along with the amended return, to the division of taxation;

   (9) If after receiving such a loan an employee does not have sufficient funds in his/her bi-weekly pay to pay the loan payment, the employee will be responsible for repayment to the Program with repayment made on or before the date the deduction would have been made from his/her bi-weekly pay. If payment is not promptly remitted, the promissory note will immediately become due and payable in full;

   (10) The loan repayment schedule will consist of the following 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 maximum repayment 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 maximum repayment 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): the maximum 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 maximum repayment period is four (4) years.

   Notwithstanding the above employees may voluntarily elect a shorter repayment period.

   (11) The minimum loan payment amount will be calculated by dividing the qualifying amount set forth in subdivision (c)(6) above by the number of pay periods in the applicable repayment period set forth in subdivision (c)(10) above.

   Notwithstanding the above employees may voluntarily elect a higher monthly repayment amount.

   (12) If the employee does not remit a payment when due, and the state commences legal action through suit or otherwise to collect the same or a portion thereof, the state shall be entitled to collect all reasonable costs and expenses of suit, including, but not limited to, reasonable attorney's fees;

   (13) If an employee leaves state employment, any outstanding loan amount will become due and payable at the date of termination. Any amount owed for the employee's unused vacation, sick, and personal time shall be applied toward payoff of the loan.

   (14) Additionally, an employee may elect to discharge accrued vacation time in exchange for the state paying a portion or the entire amount owed to the IRS and/or state division of taxation. An employee who wishes to exercise this option must inform the state controller in writing of the number of accrued vacation hours he/she wishes to discharge. The controller will first deduct the required taxes from the value of the vacation hours, and will then authorize payment of the remaining funds to the IRS and/or the division of taxation 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 employee discharges such accrued vacation time, the value of such vacation time shall be deducted from the maximum loan amount in paragraph (6) above.

   (ii) In addition, in December 2006 and thereafter each December until the year 2009, and in order to reduce the outstanding amount of the loan that is owed to the state, an employee with an outstanding domestic partner loan amount may elect to discharge vacation time accrued by the employee during that calendar year. An employee who wishes to exercise this option must notify the state controller in writing by December 1 of the number of accrued vacation hours he/she wishes to discharge for loan repayment that year. Upon approval the controller will first deduct the required taxes from the value of the vacation hours accrued, and will then deduct the remaining amount from the outstanding amount of the loan. Provided, however, this option is available only to those employees who had discharged the full amount of their accrued vacation before the inception of their loan.

   (d) All amounts repaid under the terms of the program shall be promptly remitted to the Domestic Partner Income Tax Loan Account in the general fund.

   (e) Beginning in January 2007, and in each January thereafter until the loans are repaid in full, the department of administration shall submit a report to the chairpersons of the house and senate finance committees which shall describe, as of December 31 of the previous year, the number of state employees that continued to participate in the program, the number and dollar amount of loans outstanding, and the total receipts from payroll deductions that have been transferred to the general fund during the prior twelve (12) month period.

   (f) For purposes of the Program, the term "employee(s)" shall include employee(s) of other state agencies for which the department of administration purchased health care coverage during the period 2002-2005.