Text of CA AJR 29 (2010)

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.

BILL NUMBER: AJR 29 CHAPTERED BILL TEXT RESOLUTION CHAPTER 102 FILED WITH SECRETARY OF STATE AUGUST 23, 2010 APPROVED BY GOVERNOR AUGUST 23, 2010 ADOPTED IN SENATE JULY 1, 2010 ADOPTED IN ASSEMBLY AUGUST 9, 2010 AMENDED IN SENATE JUNE 29, 2010 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 same-sex couples tax equity. LEGISLATIVE COUNSEL'S DIGEST AJR 29, Feuer. Federal income tax: same-sex couples. This measure would ask the Internal Revenue Service to issue a new ruling with respect to the federal income tax treatment of registered domestic partners and same-sex married couples. 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 the 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 and the California case law and statutes cited above 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 January 1, 2011, 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.