BILL NUMBER: AJR 29 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 16, 2010
AMENDED IN ASSEMBLY APRIL 22, 2010
AMENDED IN ASSEMBLY APRIL 19, 2010
AMENDED IN ASSEMBLY MARCH 15, 2010
INTRODUCED BY Assembly Member Feuer
(Principal coauthor: Assembly Member Portantino)
(Coauthors: Assembly Members Ammiano, Block, Blumenfield,
Brownley, Fuentes, Huffman, Jones, Monning, Salas, Saldana, Skinner,
Torlakson, Adams, Arambula, Bass, Beall, Bradford, Buchanan, Charles
Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De Leon, DeVore,
Emmerson, Eng, Evans, Fong, Galgiani, Hall, Harkey, Hayashi,
Hernandez, Hill, Jeffries, Lieu, Bonnie Lowenthal, Ma, Mendoza, Nava,
Nestande, Nielsen, John A. Perez, V. Manuel Perez, Ruskin, Solorio,
Swanson, Torres, Torrico, and Yamada)
(Coauthors: Senators Alquist, Kehoe, and Leno)
JANUARY 21, 2010
Relative to domestic partners tax equity.
LEGISLATIVE COUNSEL'S DIGEST
AJR 29, as amended, Feuer. Federal income tax: domestic
partners same-sex couples .
This measure would ask the Internal Revenue Service to
reconsider a specified memorandum and issue a new
memorandum ruling with respect to the federal
income tax treatment of property rights of
registered domestic partners and same-sex spouses
married couples .
Fiscal committee: no.
WHEREAS, On May 28, 2010, the Internal Revenue Service (IRS)
issued a Chief Counsel advisory memorandum number 201021050 (CCA)
regarding federal tax treatment of California registered domestic
partners, which recognized changes in California law between 2005 and
2007 that expanded the property rights and obligations of registered
domestic partners and that characterized their income as community
property; and
WHEREAS, As a result of the IRS CCA, registered domestic
partners in California must now combine their income and each report
half of it on his or her federal tax return; and
WHEREAS, The IRS CCA did not address the federal tax
treatment of income of California same-sex married couples; 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 heterosexual 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; and
WHEREAS, Federal tax law cited in the IRS CCA 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; now,
therefore, be it
Resolved, BY THE ASSEMBLY AND SENATE OF THE STATE OF
CALIFORNIA, JOINTLY, That the Legislature of the State of California
asks the IRS to issue a Revenue Ruling that applies the legal
analysis and conclusions of the IRS CCA to both California registered
domestic partners and same-sex married couples; 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 same-sex spouses, including the
existence of community property, so that for tax years beginning
after December 31, 2010, when filing separate federal income tax
returns, each same-sex spouse must include in his or her gross income
one-half of the community's income; and be it further
Resolved, That for tax years beginning before June 1, 2010,
the Legislature requests that the Revenue Ruling referred to above
further determine that same-sex married couples may, but are not
required to, amend their returns to report income in accordance with
the Revenue Ruling; 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.
WHEREAS, The Internal Revenue Service (IRS) issued a memorandum
(Office of Chief Counsel IRS Memorandum 200608038 dated February 24,
2006), which indicated 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 the Legislature of the State of California asks the IRS
to reconsider 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.
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CORRECTIONS Digest--Page 1.
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