DocketNumber: TC 1394
Citation Numbers: 9 Or. Tax 67
Judges: <bold>CARLISLE B. ROBERTS, Judge.</bold>
Filed Date: 4/8/1981
Status: Precedential
Modified Date: 1/13/2023
Decision for defendant rendered April 30, 1981.
Affirmed
"Plaintiff, Astrid S. Keller, and her husband, Charles Keller, moved to Seaside, Oregon, in 1968, and were both residents of Seaside until 1973, when Mr. Keller became a resident of Centralia, Washington, because of a promotional transfer by his employer, Pacific Power Light Co. Plaintiff continued as a resident of Seaside because she found it to be a nice place to live, and she still resides there, while Mr. Keller has resided in Centralia since his move in 1973. The Kellers, during this period, visited each other frequently both in Seaside and in Centralia, but plaintiff has never had any intention of moving to Centralia and her husband intends to reside in Centralia so long as his employment is there. During the period 1975-1977, there was no breakdown or discord in the Kellers' marriage relationship.
"At the time plaintiff's husband moved to Centralia, Washington and thereafter, the Kellers never considered whether or not there would be any change in the status of Mr. Keller's earnings as a Washington resident, from the status of his earnings when he was an Oregon resident, and thus there was no agreement discussed between them concerning the wages received from their respective employers. Throughout 1975 through 1977, plaintiff was employed, and paid all of her expenses from her employment earnings, including the mortgage payment on the Seaside home. Amounts not so expended were deposited in the Kellers' joint savings account which had been opened prior to Mr. Keller's move to Centralia. Mr. Keller, during this period, generally caused a portion of each of his paychecks to be deposited in the joint savings account, and no record was kept of the amounts deposited by each of the Kellers. Both Mr. and Mrs. Keller understood that the funds deposited in the joint savings account were available to either one or both of them at any time.
"Plaintiff and her husband filed joint federal income tax *Page 69 returns for the years 1975 through 1977, and plaintiff filed separate Oregon returns reporting all of her employment income and omitting all of the income her husband received from his employment in Centralia, Washington."
ORS chapter 316, the Personal Income Tax Act of 1969, provides in ORS
"The entire taxable income of a resident of this state is his federal taxable income as defined in the laws of the United States, with the modifications, additions and subtractions provided in this chapter."
1. OAR
"Community property income. An Oregon taxpayer whose spouse resides in a community property state is taxable upon the share of his spouse's community property income which is considered earned by the Oregon taxpayer according to the laws of the community property state."
2. ORS
"Each married person may establish and maintain a domicile in the State of Oregon as if that person were not married."
Washington is a community property state. RCW 6.16.030 provides that:
"Property * * * acquired after marriage by either husband or wife or both, is community property * * *."
Prior to its amendment in 1972, RCW
"The earnings and accumulations of the wife and her minor children living with her, or in her custody while she is living separate from her husband, are the separate property of the wife." (Emphasis supplied.)
Prior to 1972, the Washington Supreme Court, giving consideration to RCW
This section was substantially amended in 1972, the pertinent part thereof (applicable to the tax years here in question) then reading:
"When a husband and wife are living separate and apart, their respective earnings and accumulations shall be the separate property of each * * *." (Emphasis supplied.)1
The general rule is that the law of the domicile governs disposition of personal property. Buresh v. First NationalBank,
In the present case, the state of the husband's domicile, Washington, provided by statute that one-half of his personal earnings immediately vested in his wife, at the time he became entitled to the earnings, and the wife's domiciliary state, Oregon, had ruled that the wife was taxable upon community income to which she was entitled "according to the laws of the community property state."
Plaintiff's first objection to the Oregon income tax is that the husband's Washington earnings were not community property because the plaintiff had never been domiciled in Washington. Stating that there were no Washington cases in point, she citedLane-Burslem v. Commissioner,
But the most cogent argument made by plaintiff is that the husband and wife were "living separate and apart" and so come within the provision of the amended RCW
An examination of decisions in several of the community property states convinces the court that the phrase "living separate and apart" must be deemed words of art in community property states. There is recognition by courts in those states that there may be good reason for a husband and wife to live apart from each other, without fault; (e.g., one spouse is in a sanitarium or a mental institution for many years; economic reasons separate the couple for a substantial period of time; emigration visas may be withheld). But the *Page 72 courts distinguish between the "defunct marriage" or "abandoned marriage" from that situation in which "a will to union" continues.
3. The phrase "living separate and apart" is not defined in the statute. The decisions in Washington and other jurisdictions indicate that the bare fact that the spouses are living in different places does not constitute "living separate and apart," absent a marital rift and an intent to separate permanently. The conclusion to be drawn from the cases is that "living separate and apart" requires permanent separation involving absence of will to live together as man and wife and a lack of present intention to resume the marital relationship. The cases do not require an intent to dissolve the marriage by divorce, but do require more than a trial separation, since in the latter instance the spouses have not decided whether to resume living together or to separate permanently. The trial separation may be temporary for the purpose of resolving their difficulties so that they can live together in greater harmony.3
It is readily seen that the difficult problem presented to the courts in these cases is to weigh the many different factual situations and degrees of "separateness" which are presented and to determine whether the marital community has terminated and, if so, the date thereof. In re Estate ofOsicka, supra, and Hokenson v. Hokenson,
"* * * The evidence discloses that for about three years the deceased had been residing in Spokane, where he pursued his occupation as a painter. During at least a part of that time the respondent [wife] was not in Spokane, but it is not established by the evidence, as we view it, that she was not at any time in Spokane with her husband. During his last illness, and at the time of his death, she was in the state of Pennsylvania. But, assuming that respondent may not at any time have been with her husband in the city of Spokane, it does not follow from that fact alone that the family relationship had in a legal sense been severed. It is not necessary that the husband and wife shall at all times reside together under the same roof, in order that the legal status of the family may be preserved. * * * Such absence may be a strong evidence of affection and regard for the family, rather than otherwise. It will not do to say that in such cases the family status is destroyed by somewhat continued absence of the husband. There is nothing in this record to show that the deceased husband of respondent did not establish his residence in this state for the purpose of providing for his family, or that respondent and her children did not intend at some time to join him here. There is no positive evidence in the case that any intention ever existed on the part of either husband or wife to sever the family relationship. Any conclusion of that kind is a mere inference from the fact that the husband was in Washington and respondent was in Pennsylvania." (82 P. 999-1000.)
The foregoing quotation is particularly pertinent to the present case. Makeig v. United Security Bank Trust Co.,
Based upon the facts presented and the applicable case law, the court concludes a Washington court, presented with the question, would rule that Mr. and Mrs. Keller were not living separate and apart but clearly were maintaining a marital community.
The plaintiff's last argument is one of unconstitutional discrimination; viz., if the court finds that RCW
Unconstitutional discrimination, simply stated, occurs when persons who come within identical laws and the same statutory classification are treated differently under those laws. Plaintiff argues:
"Under the above regulation [OAR150-316.048 ] plaintiff must report all of her earnings in Oregon and one-half of her husband's Washington earnings."To impose on an Oregon taxpayer only a portion of another state's property law without imposing all of the benefits and burdens of the other state's law creates an obvious discrimination." (Pl Pre-trial Memo, 10.)
In legal concept, the plaintiff is not required to report one-half of her husband's Washington earnings. She must report one-half of a sum, measured by her husband's salary, which, under the laws of the State of Washington, are her earnings (following the community property thesis that each spouse contributes equally to the marital community, although their contributions may be very different in kind).4
4. As stated in Lawrence et al v. State Tax Commission ofMississippi,
"The obligation of one domiciled within a state to pay taxes there, arises from the unilateral action of the state government in the exercise of the most plenary of sovereign powers, that to raise revenue to defray the expenses of government and to distribute its burdens equably among those who enjoy its benefits. Hence, domicile in itself establishes a basis for taxation. Enjoyment of the privileges of residence within the state, and the attendant right to invoke the protection of its laws, are inseparable from the responsibility for sharing the costs of government. [Citations omitted.] The Federal Constitution imposes on the states no particular modes of taxation, and apart from the specific grant to the Federal government of the exclusive power to levy certain *Page 75 limited classes of taxes and to regulate interstate and foreign commerce, it leaves the states unrestricted in their power to tax those domiciled within them, so long as the tax imposed is upon property within the state or on privileges enjoyed there, and is not so palpably arbitrary or unreasonable as to infringe the 14th Amendment. * * *"See also Central Hanover Bank T. Co. v. Kelly,
Defendant's Order No. I 80-3 is affirmed. Inasmuch as this appears to be a case of first impression, the parties shall pay their own costs.
Professor Cross (often quoted in Washington opinions relating to community property) has written: "Nothing in earlier Washington cases establishes the content of the 'living separate' language of the pre-1972 statute, but 'living separate and apart' in the amended version obviously should have the same meaning." Harry M. Cross, The Community Law inWashington, 49 Wn. L Rev 729 (1974).
Makeig v. United Security Bk. T. Co. , 112 Cal. App. 138 ( 1931 )
Keller v. Department of Revenue , 292 Or. 639 ( 1982 )
Central Hanover Bank & Trust Co. v. Kelly , 63 S. Ct. 945 ( 1943 )
Poe v. Seaborn , 51 S. Ct. 58 ( 1930 )
Lawrence v. State Tax Comm'n of Miss. , 52 S. Ct. 556 ( 1932 )
Buresh v. First National Bank , 10 Or. App. 463 ( 1972 )
Russell v. Graumann , 40 Wash. 667 ( 1905 )
Kerr v. Cochran , 65 Wash. 2d 211 ( 1964 )
In Re Estate of Osicka , 1 Wash. App. 277 ( 1969 )
MacKenzie v. Sellner , 58 Wash. 2d 101 ( 1961 )
In Re Estate of Nikiporez , 19 Wash. App. 231 ( 1978 )
Rustad v. Rustad , 61 Wash. 2d 176 ( 1963 )
Hokenson v. Hokenson , 23 Wash. 2d 908 ( 1945 )