The IRS Provides Guidance to California's Registered Domestic Partners

The IRS (finally!) provided guidance this week on how California's registered Domestic Partners should file their 2005 tax returns. A little background: California is one of only 9 community property states. Community property law generally applies to married couples, and it provides that the income of either spouse is equally attributed to both spouses. In other words, in English, to figure out the income of a husband in a community property state, you take his actual income, combine it with his wife's actual income, then divide by two. This was an answer to the old problem of the husband earning mega-bucks while the wife stayed home and raised the kids, then the husband running off with the secretary and leaving the wife in poverty without any savings or retirement. The community property response: half of every dollar the husband earned during the marriage belongs to the wife. Now we get to domestic partners. California is the only state with broad same-sex relationship recognition that also has community property law. (Massachusetts and Vermont don't "do" community property, so this hadn't come up before.) Under California state law, since registered domestic partners are treated the same as married couples for most state purposes, community property law will apply to domestic partnerships. The problem is how to file taxes. See, California married couples can either file jointly, thereby easily declaring their pooled incomes, or can file separately but each claim 1/2 of their joint incomes as provided by state (community property) law. Registered domestic partners can't file jointly. The question was: can they file separately but each claim 1/2 of their joint income, as married couples filing separately do? The IRS had been dodging this question for months, as the tax filing deadline drew nearer and nearer. But this week they finally issued a letter ruling that California registered domestic partners must each claim their entire, separate incomes on their tax returns. What this means is that California registered domestic partners must continue to file the way they always have, without apportioning their incomes between themselves as a couple as they could if they were married. Anyone surprised that the IRS refused to extend the same benefits to registered same-sex domestic partners that they extend to married couples? If so, I have a pretty terrific bridge for sale......