The federal Internal Revenue Service (IRS) in Letter Ruling 201021048, dated May 5, 2010, determined that a taxpayer, who is a registered domestic partner in California, must report on his/her individual federal income tax return one-half of the combined income that the taxpayer and domestic partner earn from the performance of personal services and one-half of the combined income derived from their community property.

Due to a difference between California and Wisconsin law related to domestic partners, this ruling does not affect the Wisconsin income tax treatment of domestic partners.

California law provides that registered domestic partners shall have the same rights, protections, and benefits, and shall be subject to the same responsibilities, obligations, and duties under law, whether they derive from statutes, administrative regulations, court rules, government policies, common law, or any other provisions or sources of law, as are granted to and imposed upon spouses. In addition, effective January 1, 2007, the provision in California law that provided that earned income of domestic partners was not to be treated as community property for state income tax purposes was repealed. As a result, registered domestic partners in California report income on their California income tax returns using the community property laws. This tax treatment of community property is extended to the federal income tax return based on the recent IRS ruling.

There is no provision in the Wisconsin domestic partner law (ch. 770, Wis. Stats.) that provides the same rights, protections, benefits, responsibilities, obligations, and duties to domestic partners that are provided to married taxpayers. Section 770.001 provides that "The legislature further finds that the legal status of domestic partnership as established in this chapter is not substantially similar to that of marriage." In addition, there is no provision in marital (community) property law (ch. 766, Wis. Stats.) that applies the marital property provisions to domestic partners. Section 766.31 provides that each spouse has a present undivided interest in each item of marital property. Wisconsin law does not provide for the sharing of marital income between domestic partners. Therefore, domestic partners do not report one-half of marital income for Wisconsin or federal income tax purposes.

June 9, 2010