BILL NUMBER: AJR 29 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Feuer
JANUARY 21, 2010
Relative to domestic partners tax equity.
LEGISLATIVE COUNSEL'S DIGEST
AJR 29, as introduced, Feuer. Federal income tax: domestic
partners.
This measure would ask the Internal Revenue Service to reconsider
its conclusion in a specified memorandum and issue a new memorandum
with respect to the federal income tax treatment of property rights
of registered domestic partners and same-sex spouses.
Fiscal committee: no.
WHEREAS, The Internal Revenue Service (IRS) issued a memorandum
(Office of Chief Counsel IRS Memorandum 200608038 dated February 24,
2006), which concluded that an individual who is a registered
domestic partner in California must report all of his or her income
earned from the performance of his or her personal services,
notwithstanding the California Domestic Partner Rights and
Responsibilities Act of 2003; and
WHEREAS, As a consequence, for federal income tax purposes
California registered domestic partners could not claim a community
property interest in the income of both partners, but instead had to
report all of each partner's income separately, without reference to
the income of the other partner; and
WHEREAS, The IRS memorandum found that state community property
laws apply only to a husband and wife in a heterosexual marriage, and
not outside that context; and
WHEREAS, The IRS memorandum further indicated that the rights
afforded domestic partners under the California Domestic Partner
Rights and Responsibilities Act of 2003 were not made an incident of
marriage by the inveterate policy of the state and that the
relationship between registered domestic partners was not marriage
under California law, and that accordingly they could not file
separately with each claiming one-half of the community's total
earned income for federal tax purposes; and
WHEREAS, Federal case law holds that the characteristics of
property ownership, including community property, are determined by
the states, and taxation of that property is determined by the
federal government; and
WHEREAS, The Supreme Court of the United States has held that the
IRS must defer to state law determining property ownership, including
the existence of community property; and
WHEREAS, Pursuant to a Presidential Memorandum Regarding
Preemption issued by the White House on May 20, 2009, preemption of
state law by executive departments and agencies should be undertaken
only with full consideration of the legitimate prerogatives of the
states and with a sufficient legal basis for preemption; and
WHEREAS, California statutes (see Chapter 893 of the Statutes of
2001, Chapter 421 of the Statutes of 2003, and Chapter 802 of the
Statutes of 2006) and case law (In re Marriage Cases (2008) 43
Cal.4th 757; and Strauss v. Horton (2009) 46 Cal.4th 364) confirm
that registered domestic partners and married same-sex couples whose
marriages remain valid under California law have the same rights and
responsibilities under California law as different-sex married
couples, including those rights and responsibilities related to
community property, and further, that California income tax reporting
is the same for registered domestic partners and married
individuals; and
WHEREAS, Property, including income, acquired while domiciled in
California by registered domestic partners or married same-sex
couples whose marriages are still valid in California is community
property under California law; now, therefore, be it
Resolved, by the Assembly and Senate of the State of California,
jointly, That Legislature of the State of California asks the IRS to
reconsider the conclusion in its Memorandum 200608038 and issue a new
memorandum based on the fact that settled federal law acknowledges
the state's role in defining property rights and the federal
government's role in deciding how it will be taxed for federal
purposes; furthermore, the enactment of SB 1827 (Chapter 802 of the
Statutes of 2006) corrected an exception for state income tax
purposes of earned income from registered domestic partners'
community property under AB 205 (Chapter 421 of the Statutes of
2003), such that California registered domestic partners and same-sex
spouses now are required to file state income tax returns using the
same rules as are applicable to heterosexual spouses, including the
choice between filing jointly or separately with a reference to the
filer's marital or registration status, thus making California income
tax reporting the same for registered domestic partners and married
individuals regardless of sexual orientation; and be it further
Resolved, That the Legislature requests that, consistent with
established legal precedents, the IRS defer to California law on
treatment of property belonging to registered domestic partners and
same-sex spouses, including the existence of community property, so
that when filing separate federal income tax returns, each registered
domestic partner and same-sex spouse should include in his or her
gross income one-half of the community's income; and be it further
Resolved, that the Chief Clerk of the Assembly transmit copies of
this resolution to the President and Vice President of the United
States, to the Speaker of the House of Representatives, to the
Majority Leader of the Senate, to each Senator and Representative
from California in the Congress of the United States, to the
Secretary of the Treasury, to the Commissioner of the Internal
Revenue Service, and to the Internal Revenue Service Office of Chief
Counsel.