Marriage Equality Goes Before the California Supreme Court

It has taken four years for the legal battle over California's marriage equality to reach the Supreme Court. On Tuesday, March 4th at 9:00 am, California's seven Supreme Court justices will hear oral arguments in the San Francisco marriage case that was launched in March of 2004. This case challenges the constitutionality of state law that discriminates against same-sex couples in marriage.

The History:
The San Francisco same-sex weddings took place between February 12 and March 11 of 2004 when San Francisco's mayor, Gavin Newsom, issued a directive to the city-county clerk to issue marriage licenses to same-sex couples.

On February 20, Governor Arnold Schwarzenegger ordered state attorney general Bill Lockyer to halt the marriages. Lockyer refused, although he agreed that the marriages were unlawful.

On March 11th, the California Supreme Court ordered the city to stop issuing marriage licenses to same-sex couples. However by this time, approximately 4,000 same-sex couples had already been issued marriage licenses.

In August of 2004, the Supreme Court ruled that all the marriage licenses are worthless, and the subsequent marriages are not valid.

Shortly after the marriage licenses were invalidated, the marriage cases were filed with the court. In April of 2005, San Francisco Superior Court Judge Richard A. Kramer ruled that the exclusion of same-sex couples from marriage violates the California Constitution.

In November of 2006, in a 2-1 vote, the California Court of Appeal reversed Judge Kramer's ruling. Now, the California Supreme Court is poised to hear the case.

This is a landmark case and shouldn't be missed. And lucky for us, we will be able to watch oral arguments live on the California Channel cable network (televised statewide), as well as a live webcast. For a list of local stations, or to find the webcast, go to www.calchannel.com.


There will also be Community viewings available in San Francisco (9 a.m. to 12 noon, unless otherwise noted) at the following locations:

SAN FRANCISCO

San Francisco LGBT Community Center
Three Dollar Bill Cafe
1800 Market Street (at Octavia)

UC Hastings College of the Law
Louis B. Mayer Auditorium
198 McAllister Street
(Panel discussion about the cases will follow at 12:30 p.m.)

California Supreme Court
Overflow Auditorium
359 McAllister Street

Milton Marks Conference Center
Hiram J. Smith State Office Building
Lower Level
455 Golden Gate Avenue

California Domestic Partnership Tax Information

The new Domestic Partnership tax laws are a bit tricky, so for those of you who are filing as Domestic Partners for the 2007 tax year, I thought I could give you a bit of information to help you out.

California enacted SB 1827 as law, beginning January 1, 2007, which requires registered domestic partners to use the same filing status as married couples. The information below will help you understand the changes associated with this tax law, as well as a few additional changes for the 2007 tax year.

California Taxation of Domestic Partners - General Principles.
In general, California now affords the same rights and responsibilities to RDPs that previously were available only to married individuals. For California tax purposes, the same rules applicable to married individuals (relating to filing status, community property income, etc.) now apply to RDPs. However, because the federal government does not recognize domestic partners as married individuals for federal tax (IRS) purposes, RDPs will continue to file as unmarried individuals on their federal returns.

Here are some common Q&A for RDPs:

Can I file a joint California return with my domestic partner for tax years prior to 2007?
No. Domestic partners cannot file a married filing joint or married filing separate return for tax years prior to 2007. A domestic partner is required to use the same filing status for state income tax purposes that was used or would have been used for federal income tax purposes. For tax years beginning on or after January 1, 2007, domestic partners are required to use the same filing status as married couples.

Is the earned income of domestic partners treated as community property for tax years prior to 2007?
No. Earned income is not treated as community property for state income tax purposes for tax years prior to 2007.

Are all domestic partners required to file joint or married filing separate returns under the new law?
No, only domestic partners who are registered with the California Secretary of State are required to file using the married filing joint or married filing separate filing status. More information on unions entered into from other states will be provided on this Website in the near future.

When will registered domestic partners (RDPs) use the same filing status rules as married individuals when filing California returns?
The new law applies for RDPs filing their 2007 tax returns in 2008.

Can RDPs file a California tax return with the same filing status as they use on their federal return?
No, the new law requires RDPs to file a joint return using the married filing joint or married filing separate filing status. Federal law does not allow RDPs to file a joint return.

If an RDP decides to file a California married filing separate return, are there any special rules for completing the return?
Yes, as is the case with all taxpayers eligible to use the married filing joint status, RDPs that choose to file a return using the married filing separate filing status should see FTB Publication 1051A, Guidelines for Married Filing Separate Returns.

Do RDPs combine the number of exemptions they claim on their separate federal returns to arrive at the total number of exemptions they claim on their California return?
Yes, all personal, blind, senior, and dependent exemptions should be combined on the married filing joint California return. For a detailed explanation of exemptions see Form 540A instructions.

Can an RDP who lives with their partner and files head of household (HOH) for federal purposes use the HOH filing status for state purposes as well?
If your RDP lived with you and your child, stepchild, adopted child, or eligible foster child, at any time during the last 6 months of the year, you do not qualify to use the HOH filing status for California purposes.

Can an RDP file as head of household (HOH) on a California return?
Yes, RDPs can file HOH on a California return if they maintain the main home for their child, stepchild, adopted child, or eligible foster child and are “considered not in a registered domestic partnership.”"

To be “considered not in a registered domestic partnership” you must meet all of the following requirements:

• Your RDP did not live in your home during the last six months of the tax year.


• You file a separate return.


• You pay more than half the cost of keeping up your home for the tax year.


• Your home was the main home of your child, stepchild, or eligible foster child for more than half the year.


• You must be able to claim an exemption for the child.

For details on filing HOH see FTB Publication 1540, California Head of Household Filing Status.

Does an RDP need to terminate the domestic partnership to qualify for HOH?
No, since a married individual can qualify for HOH without terminating the marriage (divorce) an RDP can qualify for HOH without terminating the domestic partnership. In both situations the parties would have to be “considered not in a registered domestic partnership.”

If one RDP dies, can the surviving RDP file a joint return?
Yes, if an RDP dies, the surviving RDP can file as married filing joint for the year the RDP dies if he or she does not enter into a new registered domestic partnership or marriage. If an RDP dies in the following year prior to filing their return the surviving RDP can file a married filing joint return. For more information on surviving RDPs see deceased taxpayer.

How do RDPs who file a California joint return combine their incomes, deductions, credits, etc., from their separate federal returns to complete their California return?RDPs will combine income and deductions from their separate federal returns to complete their California tax return and compute their tax. Draft instructions for RDPs will be available on our Website in June 2007.

How do RDPs who file a California joint return treat itemized deductions that are subject to AGI limitations?Under current law RDPs combine their federal AGIs to determine limitations of credits and deductions that apply to their California return. FTB is exploring alternatives to the current law for AGI. For details of the alternatives being considered, see FTB's AGI Limitation Discussion paper.

Can FTB waive accuracy-related penalties for RDPs due to reasonable cause?Yes, but there are no special rules to grant waiver of penalties for RDPs. "Reasonable cause" is a standard exception to most penalties imposed under the Revenue and Taxation Code and the Internal Revenue Code. Generally, reasonable cause exists where the failure to comply occurs despite the exercise of ordinary business care and prudence.

Will FTB impose a penalty for underpayment of estimated tax for RDPs who filed a joint 2007 tax return?No, unless the exceptions that normally apply are not available. See estimated tax penalty exceptions.

Will RDPs need to update their Form DE-4, Employees Withholding Allowance Certificate?
Although revising the Form DE-4 is not required, RDPs may want to update their California filing status withholding allowances on Form DE-4 to avoid over or under withholding of California income taxes. Under withholding of taxes may result in penalties.

How should RDPs report on their married filing separate returns items such as community income, community deductions, and separate expenses paid with community property funds?
An RDP will use the same community property rules that apply to married individuals filing a separate return. RDPs may want to use a worksheet to record the division of community property shown on each return.

Do RDPs combine their federal itemized deductions that are not subject to limitations to arrive at their California itemized deductions before California adjustments?
Yes, to arrive at California itemized deductions RDPs filing a joint return would combine their federal itemized deductions that are not subject to limitations.

Have the mortgage interest rules for RDPs filing California returns changed?
Yes, now that the RDPs are treated as married individuals for California purposes the limitations applicable on a federal return for married individuals will limit your mortgage interest deduction on your California return. For more information about those limits see federal Publication 936, Home Mortgage Interest Deduction.

How does SB 1827 impact sales of CA real property?
Beginning January 1, 2007, RDP's who sell or transfer jointly owned CA real property that will be reported on their 2007 or later tax return shall be treated as spouses for purposes of completing Form 593-B Real Estate Withholding Tax Statement. Therefore, Real Estate Escrow Persons may complete and provide RDP's with a combined Form 593-B listing both partners for the completed real estate transaction.

Can an RDP who files a California married filing joint return exclude up to $500,000 of capital gain on the sale of a principal residence?
Yes, if they meet the capital gain exclusion rules that apply to a married individual filing a joint return. For more information, see federal Publication 523, Selling Your Home.

Can an RDP who filed a joint return apply for relief under California's innocent spouse provisions?
Yes, California innocent spouse provisions apply to anyone who files a married filing joint return.

If a court orders termination of a registered domestic partnership and a California Family Law Court awards spousal support (alimony), what is the tax treatment of these payments?
If the payment satisfies the requirements under tax law for alimony, it would be deducted by the payor and included by the payee. However, federal treatment of these payments is uncertain.

If a court orders a termination of a registered domestic partnership and a California Family Law Court orders a division of mutually acquired property (acquired with separate and/or community funds), what are the tax considerations for a gift, sale, part gift, or part sale? Could anything qualify for IRC Section 1041 or R&TC Section 18031 treatment?
If the property transfer satisfies the requirements under California tax law, the treatment is the same as for a property transfer by a married individual. Federal treatment of these transactions is uncertain.

What California tax benefits are available for a registered domestic partner?
Effective January 1, 2002, several taxpayer benefits were extended to a taxpayer's domestic partner and the domestic partner's dependent(s) for medical expenses and health insurance benefits that occur on or after January 1, 2002. The benefits provided by Revenue and Taxation Code section 17021.7 include:

• An exclusion from gross income for employer-provided accident and health insurance.


• An exclusion from gross income for medical expense reimbursement if the expense was not previously deducted.


• Medical expenses deductible as an itemized deduction.


• Long-term health care insurance deductible as a medical expense.


• A deduction by self-employed individuals for health insurance costs. The deduction may not exceed the net earnings from the trade or business in which the insurance plan is established.

Federal tax law does not allow the same benefits for domestic partners. These deductions are taken as an adjustment on the Schedule CA(540) or Schedule CA(540NR). For more information go to the State of California Franchise Tax Board Web Site.

If a registered domestic partnership was terminated before the end of the 2007 taxable year, will a former registered domestic partner (RDP) be liable for outstanding tax liabilities that the other former partner has with the Franchise Tax Board?
Under California tax law, the Franchise Tax Board cannot hold the former RDP personally liable for the tax liability of the other former RDP. The same rules apply in this situation as apply to a previously married person filing a single return. When a single return is filed, the individual filer is responsible only for his or her own tax liabilities and penalties

If an RDP files a separate return and failed to include an item of community income on the return which should have been included, are there any circumstances under which relief may be allowed if an assessment of tax is issued based on the failure to report that income on the separate return?
Similar to the treatment of community property issues for married couples, if the RDP establishes that he or she did not know or have reason to know of the unreported item of community property, and it would be inequitable to include that item in the RDP's gross income, then relief from tax liability for that item may be available under California law.

If a court with jurisdiction of a dissolution proceeding for a registered domestic partnership assigns a tax debt owing to the FTB to one of the partners, is the FTB bound by the court order?
The parties to a dissolution can stipulate to any payment arrangement of taxes that they wish, and the court could order one party to satisfy outstanding tax liabilities. However, the FTB is not generally bound by such a court order. There are some circumstances where the FTB will follow a court order revising tax liability between the parties to a dissolution proceeding. See FTB Form 705.

• Official FTB Publication 737 Tax Information for Registered Domestic Partners

All information came directly from the State of California Franchise Tax Board Web Site.

New Laws for 2008

Every year there are a ton of new laws that come into effect on Jan. 1st, most of which none of us have never even heard of. I mean how can we be expected to keep up with all the laws when politicians like Governor Schwarzenegger sign 740 new ones for 2008? I guess I shouldn't complain too much, there are actually quite a few this year that will benefit many of us...even a few civil rights laws...

Here are just a few of the laws that come into effect this year:

California Auto/Driving Related Laws that take effect Jan 1, 2008

• Smoking in Vehicles. SB 7 prohibits anyone from smoking a cigarette, a cigar, or a pipe in a vehicle, whether in motion or not, in which there is a minor. The smoker can be fined up to $100. Police can only cite for this violation in connection with a stop for a suspected violation of another driving offense.


• School Zones. AB 321 will now allow local jurisdictions to adopt an ordinance establishing a speed limit of 15 miles per hour in a school zone. The 15-mph speed limit must be posted and applies up to 500 feet from the school. A 25-mph limit will apply at a distance of 500-1,000 feet from the school.


• Key Codes. SB 1542 gives motorists a convenient and secure option for getting replacement keys when theirs have been lost, stolen, or damaged. Automakers must provide, at any time, the key codes necessary for a licensed and registered locksmith to make a replacement key for vehicles sold or leased in California on or after January 1, 2008. Exceptions include automakers that sell fewer than 2,500 vehicles annually, and manufacturers that make their own keys -- i.e. BMW and Mercedes-Benz -- who have until 2013 to comply with the law provided that, in the interim, they send a replacement key by overnight mail.

California Auto/Driving Related Laws that take effect July 1st, 2008:

• Cell Phones and Driving. SB 1613 prohibits the use of handheld cellular telephones while driving. Starting July 1, 2008, an adult driver may use a cell phone only if it has a hands-free listening and speaking system. Drivers ticketed for a violation will be subject to a fine of at least $70 (base fine plus penalties) for a first offense and at least $175 (base fine plus penalties) for subsequent offenses.


• Teen Drivers and Cell Phones. SB 33 prohibits drivers under age 18 from using any cell phone or other "mobile-service device" while driving, even if it is equipped with a hands-free device.

Misc. California Laws

• California Minimum Wage Law. The hourly pay will increase by 50 cents to $8 on Jan. 1, making them the second highest paid minimum wage workers in the country along with workers in Massachusetts. The Massachusetts minimum wage also will reach $8 an hour on Jan. 1, according to the U.S. Department of Labor.


• Gang Parenting. Courts could require the parents or guardians of gang members to attend parenting classes in attempt to prevent first-time juvenile offenders from committing additional crimes.


• Illegal Immigrants. Legislation prevents cities and counties from requiring landlords to serve as surrogate border patrol agents by obtaining and reporting the immigration status of their tenants. The measure also prohibits ordinances preventing landlords from renting to illegal immigrants.


• Gift Certificates. This law allows shoppers to cash in gift certificates that have less than $10 left in value. Consumer advocates say that will prevent stores from benefiting from an "undeserved bonanza" generated by unexhausted gift certificates that stores have refused to trade for cash.


• The Civil Rights Act of 2007 (AB 14). The Unruh Civil Rights Act entitles all people in California to full and equal accommodations, advantages, facilities, privileges or services in all business establishments regardless of sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status or sexual orientation. This bill expands these protections to include a number of groups and individuals previously not specifically listed.


• Name Change, Domestic Partnership and Marriage License (AB102)
  Requires the state Secretary of State to amend domestic partner registration forms to include an option for either or both parties to change their middle and/or last names. The Secretary of State, when preparing the Certificate of Registered Partnership, must include the name used by each party before registration and any new name(s).


• Health Care and Whistleblower Protection (AB 632)
  This bill prohibits a health facility from discriminating or retaliating against any patient, employee, member of the facility's medical staff or any other health care worker of the facility because that person has (1) presented a grievance, complaint or report to an entity or agency responsible for accrediting or evaluating the facility or to any other governmental agency; or (2) has initiated, participated or cooperated in an investigation or administrative proceeding related to the quality of care, services or conditions at the facility.

New Hampshire's New Same Sex Union Law

• As of Jan 1st, 2008, Lesbian and Gay couples can now apply for Same Sex Civil Unions.

New Oregon Laws

• The Oregon Equality Act. Prohibits discrimination based on sexual orientation (including gender identity)


• The Oregon Family Fairness Act. Establishes domestic partnerships for same-sex couples.