California lawmakers earlier this month got one step closer to what Assemblyman Mike Feuer (D-Los Angeles) calls tax equity for same-sex married couples. Assembly Joint Resolution 29 (AJR 29) passed both houses in a vote of 52-9.
The resolution, sponsored by Feuer, asks the Internal Revenue Service to change a policy that treats California’s same-sex married couples differently than registered domestic partners for federal income tax purposes. The current law requires same-sex married spouses to file two federal tax returns, which generally results in higher taxes because the federal government doesn’t recognize the way California law treats community property.
In May, the IRS Chief Counsel Advisory issued a memorandum which allows registered domestic partners to file their federal income tax with each partner reporting half of their community income on their federal returns. Because California temporarily allowed same-sex marriages, there are many legally married same-sex California residents who are not included in the beneficial tax provisions of that memorandum. AJR 29 asks the IRS to allow same-sex married spouses the same tax treatment as registered domestic partners.
“I commend the IRS for affirming that domestic partners have the same community property rights as heterosexual spouses,” Feuer said. “Now it needs to ensure that same-sex married couples can enjoy the same protections from unfairly high taxes. I urge the IRS to respect California law and honor the rights of California’s same sex couples.”
Before the May memorandum, the guideline in use was a memo issued in 2006. That document stated that registered domestic partners were required to report their incomes separately on their federal taxes, rather than claiming a community property interest in their combined income. But California statutes and case law permit registered domestic partners and same-sex couples with marriages considered valid under state law to have the same rights and responsibilities as heterosexual married couples.
In California, income is treated as community property for married couples and registered domestic partners. AJR 29 points out that while the IRS May 2010 Memorandum corrects the inequity for registered domestic partners, it does not address the issue for same-sex married couples. Federal case law states that the characteristics of property ownership are to be determined by states, not the federal government.
After AJR 29 passed the Assembly with bipartisan support, Mario Guerrero, the government affairs director of Equality California issued this statement: “All married couples deserve to be taxed fairly and appropriately, regardless of their sexual orientation. We thank lawmakers for urging the federal government to end its disproportionate and unjust taxation of married same-sex couples.”