No Income Splitting for Domestic Partners: How the IRS Erred

5 Pages Posted: 24 Mar 2006

See all articles by Dennis J. Ventry

Dennis J. Ventry

University of California, Davis - School of Law


On February 24, 2006, the IRS issued guidance with respect to the federal income tax treatment of domestic partners in California. The ruling closed the door on those California domestic partners who were considering splitting in half the combined domestic partnership income from property and services for purposes of filing federal income taxes. This article demonstrates that the Service got it wrong in its unpersuasive, historically inaccurate, and ultimately indefensible memorandum.

The California Domestic Partner Rights and Responsibilities Act grants registered domestic partners the same rights, protections, and benefits as married couples under California's community property regime. There is a presumption - as there is for opposite-sex married couples during marriage - that all income and property acquired during the domestic partnership is community property, with each partner enjoying equal ownership interests.

Notwithstanding these equivalent ownership interests - the same interests which have allowed spouses in California to divide income in half when filing federal income taxes for a period that predates by nearly twenty years the enactment of the income-splitting joint return in 1948 - the IRS found that registered domestic partners cannot split income. The Service's analysis relied heavily on Poe v. Seaborn, the 1930 U.S. Supreme Court case granting income-splitting privileges to married couples in the community property state of Washington. According to the IRS, the Supreme Court's decision in Seaborn does not apply to the application of community property law outside the context of a husband and wife.

If the legal analysis in Seaborn had anything to do with marriage, the Service's reasoning might be appropriate. But it didn't. Poe v. Seaborn was about ownership of the community's income from property and services, not about marriage. In fact, during the 1920s and 1930s, marriage per se did not inform the Supreme Court's jurisprudence involving the taxation of husbands and wives residing in community property versus common law states. The Court was much more concerned with, alternatively, management and control (or dominion) over community/marital income and property on the one hand, and ownership (or legal title and vested or expectancy interests) on the other.

Keywords: taxation, domestic partners, income splitting

JEL Classification: H25, H32

Suggested Citation

Ventry, Dennis J., No Income Splitting for Domestic Partners: How the IRS Erred. Tax Notes, pp. 1221-25, March 13, 2006, UCLA School of Law, Law-Econ Research Paper No. 06-13, Available at SSRN:

Dennis J. Ventry (Contact Author)

University of California, Davis - School of Law ( email )

UC Davis School of Law
400 Mrak Hall Drive
Davis, CA 95616-5201
United States
530-752-4566 (Phone)

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