BILL ANALYSIS
SB 1827
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Date of Hearing: August 9, 2006
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
SB 1827 (Migden) - As Amended: June 14, 2006
Policy Committee: Revenue and
Taxation Vote: 5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires registered domestic partners to file either a
joint state income tax return or separate state income tax
returns, applying the standards applicable to married couples
under federal income tax law.
FISCAL EFFECT
1)The Franchise Tax Board (FTB) estimates state General Fund
revenue losses of $8 million in fiscal year 2007-08, $9
million in 2008-09, and $10 million in 2009-10. (FTB estimates
that, pursuant to this bill, 59% of registered domestic
partners would see a reduction in taxes, 29% would experience
no change in taxes, and 12% would experience an increase in
taxes.)
2)FTB administrative costs of $138,000 in 2007-08 and $91,000
annually thereafter. FTB's automated systems that compare
federal and state tax information for audit purposes would
need additional programming and testing, due to the fact that
domestic partners would continue to file two separate federal
returns, but only one state return, for those filing jointly.
COMMENTS
SB 1827
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1)Background . Federal tax law provides for five different
filing status options: married filing joint, married filing
separate, head of household, single, or qualified widow(er)
with dependent child. Internal Revenue Service rules specify
criteria for determining the appropriate filing status for an
individual. Under federal tax law, registered domestic
partners only have the filing choices of single or head of
household.
Current state law requires an individual to report the same
filing status on his or her state income tax return as
reported on his or her federal return. Therefore, registered
domestic partners only have the filing choices of single or
head of household in California.
Registered domestic partnerships include same-sex partnerships
and opposite-sex partnerships in which one or both partners
are age 62 or older and are eligible to receive Social
Security benefits. The Secretary of State estimates that the
total number of registered domestic partners in California
will be 40,950 by December, 2007.
2)Purpose . This bill is intended to provide registered domestic
partners with the same filing status rights and burdens as
married persons. Specifically, this bill would require
registered domestic partners to file either a joint state
income tax return or separate state income tax returns,
applying the standards applicable to married couples under
federal income tax law.
This bill would also would specify a rule pertaining to the
reporting of adjusted gross income (AGI) of registered
domestic partners filing joint returns, for the purpose of
computing limitations on itemized deductions and credits which
are based on AGI (since current state law uses the federal
definition of AGI). The new state rule would simply combine
the separately-reported AGI on the federal returns of the
registered domestic partners.
Additionally, this bill would revise provisions of the Family
Code to treat registered domestic partners as married persons
SB 1827
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for purpose of filing status.
3)Prior Legislation . Provisions allowing for joint filing of
state tax returns by registered domestic partners were removed
from AB 205 (Goldberg), Chapter 421of 2003, prior to its
enactment. (AB 205 made various revisions to California laws
regarding domestic partners.)
AB 25 (Migden), Chapter 893 of 2001, extended tax benefits for
medical expenses and health insurance to domestic partners and
their dependents.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081