(a) General. The Franchise Tax Board shall
prescribe necessary forms identified in Regulation sections
18662-0 through
18662-8, or any successor forms
designated by the Franchise Tax Board on its website at
www.ftb.ca.gov, for the reporting and
remitting of withholding of tax amounts.
(b) Real Estate Sales -- Information Returns.
(1) Payment Due Dates and Form. Real estate
withholding is due by the 20th day of the calendar month following the month
escrow closes. For example, if escrow closes on January 3rd, payment is due on
or before February 20th. If February 20th falls on a weekend or holiday, the
payment may be remitted pursuant to FTB Form 593, Real Estate Withholding
Statement, or any successor form designated by the Franchise Tax Board on its
website at
www.ftb.ca.gov ("FTB Form 593")
and FTB Form 593-V, Payment Voucher for Real Estate Withholding, or any
successor form designated by the Franchise Tax Board on its website at
www.ftb.ca.gov ("FTB Form 593-V") on the
next business day without penalty. The required information specified in FTB
Form 593 and FTB Form 593-V is set forth in subsection (g) and subsection (h),
respectively, below. Payment of withholding on Section
1031 like-kind exchanges is due on
the 20th day of the calendar month following the month in which the exchange
was completed or failed. For simultaneous exchanges, the exchange is completed
in the month escrow closes. For deferred exchanges, the exchange is completed
in the month the last requirement of the exchange is completed. For failed
exchanges, the exchange fails in the month when the proceeds were distributed
to the seller/transferor after a determination that the exchange would not meet
the Internal Revenue Code section
1031 exchange requirements.
Remittance shall be in the form and manner as the Franchise Tax Board may
prescribe in FTB Form 593.
(2)
Reporting.
(A) In General. Real estate
sales/transfers and withholding are reportable to the Franchise Tax Board on
FTB Form 593, which can be filed on paper or electronically (where allowable).
Withholding payments made via check or money order must be remitted with FTB
Form 593-V. Withholding payments made electronically do not require FTB Form
593-V.
(B) Information Returns. An
FTB Form 593 stating the amount of the real estate withholding shall be
provided to the seller/transferor either at the time of sale or not later than
the 20th day following the month in which escrow
closes, and may be required to be filed with the Franchise Tax Board, in the
form and manner that the Franchise Tax Board may prescribe in FTB Form 593 and
FTB Form 593-V. The seller/transferor may be required to attach a copy of the
FTB Form 593 to the appropriate tax return to be filed with the Franchise Tax
Board in order to claim a credit for the withheld
amount.
(c)
Withholding From Payments Other Than Real Estate Sales.
(1) Payment Due Dates.
(A) In General. Withholding on nonresident
payments is due on the same dates as required for calendar year federal
estimated tax. Withholding from payments made January 1st through March 31st is
due April 15th, April 1st through May 31st is due June 15th, June 1st through
August 31st is due September 15th, and September 1st through December 31st is
due January 15th of the following year. Reporting shall be completed by paper
or electronically pursuant to FTB Form 592, Resident and Nonresident
Withholding Statement, or any successor form designated by the Franchise Tax
Board on its website at
www.ftb.ca.gov
("FTB Form 592"). Payments shall be remitted using FTB Form 592-V, Payment
Voucher for Resident or Nonresident Withholding, or any successor form
designated by the Franchise Tax Board on its website at
www.ftb.ca.gov ("FTB Form 592-V"), for
paper checks or money orders. Withholding payments made electronically do not
require FTB Form 592-V. The required information specified in FTB Form 592 and
FTB Form 592-V is set forth in subsection (i) and subsection (j), respectively,
below.
(B) Domestic Pass-through
Entity. Withholding on payments is due on the same dates as required for
calendar year federal estimated tax. Withholding from payments made January 1st
through March 31st is due April 15th, April 1st through May 31st is due June
15th, June 1st through August 31st is due September 15th, and September 1st
through December 31st is due January 15th of the following year. Reporting
shall be completed by paper or electronically pursuant to FTB Form 592-PTE,
Pass-Through Entity Annual Withholding Return, or any successor form designated
by the Franchise Tax Board on its website at
www.ftb.ca.gov ("FTB Form 592-PTE"). Payments
shall be remitted using FTB Form 592-Q, Payment Voucher for Pass-Through Entity
Withholding, or any successor form designated by the Franchise Tax Board on its
website at
www.ftb.ca.gov ("FTB Form
592-Q"), for paper checks or money orders. Withholding payments made
electronically do not require FTB Form 592-Q. The required information
specified in FTB Form 592-PTE and FTB Form 592-Q is set forth in subsection (k)
and subsection (
l), respectively, below.
(C) Foreign (Non-U.S.) Partners or Members.
California follows federal procedures for foreign partners. Therefore, the due
dates for payments are the same as the federal due dates, as prescribed in
federal regulations. Remittance shall be pursuant to FTB Form 592-F, Foreign
Partner or Member Annual Withholding Return, or any successor form designated
by the Franchise Tax Board on its website at
www.ftb.ca.gov ("FTB Form 592-F") and Form 592-A,
Payment Voucher for Foreign Partner or Member Withholding, or any successor
form designated by the Franchise Tax Board on its website at
www.ftb.ca.gov ("FTB Form 592-A"), either
electronically or by paper check. The required information specified in FTB
Form 592-F and FTB Form 592-A is set forth in subsection (m) and subsection
(n), respectively, below.
(2) Reporting.
(A) In General. Withholding on payments must
be reported to the Franchise Tax Board on FTB Form 592, which can be filed on
paper or electronically (where allowable). Withholding payments made via check
or money order must be remitted with FTB Form 592-V. Withholding payments made
electronically do not require FTB Form 592-V.
(B) Domestic Pass-through Entity Withholding.
If the withholding agent is a domestic pass-through entity, FTB Form 592-Q
shall be filed with each quarterly withholding remittance. Total quarterly
withholding payments made throughout the year, or total withholding paid by
another entity and to be allocated to partners or members, shall be reported to
the Franchise Tax Board pursuant to FTB Form 592-PTE, on an annual basis no
later than January 31st of the year following the year for which such
withholding was required to be remitted to the Franchise Tax Board.
(C) Foreign (Non-U.S.) Partner or Member.
California conforms to federal regulations and procedures for foreign partner
withholding, so the due dates for reporting such withholding are the same as
the federal due dates, as prescribed in federal regulations, and pursuant to
FTB Form 592-F and Form 592-A. FTB Form 592-A, shall be filed with each
quarterly remittance. Quarterly withholding payments shall then be reported on
FTB Form 592-F, on or before the 15th day of the 4th month following the close
of the partnership's or LLC's taxable year.
(D) FTB Form 592-A contains five payment
vouchers, one for each reporting period plus a supplemental voucher if there is
a balance due on FTB Form 592-F. The supplemental voucher is due on the
original due date of FTB Form 592-F, regardless of an extension. The required
information specified in FTB Form 592-A is set forth in subsection (n), below.
The name and Taxpayer Identification Number (TIN) of each payee should be
provided so that the payment can be properly posted to the payee's
account.
(E) Payee Statement.
Pursuant to FTB Form 592-B, Resident and Nonresident Withholding Tax Statement,
or any successor form designated by the Franchise Tax Board on its website at
www.ftb.ca.gov ("FTB Form 592-B"), a payee
statement shall be provided to the payee aggregating all withholding for the
tax year by January 31st of the following year, and may be required to be filed
with the Franchise Tax Board, in the form and manner that the Franchise Tax
Board may prescribe in FTB Form 592-B and instructions. The required
information specified in FTB Form 592-B is set forth in subsection (o), below.
The payee is required to attach a copy of FTB Form 592-B to the appropriate tax
return to be filed with the Franchise Tax Board in order to claim a credit for
the withheld amount.
(3)
Electronic and Magnetic Media. Any reference to FTB Form 592, FTB Form 592-PTE,
or FTB Form 592-F or payments on FTB Form 592-A, FTB Form 592-Q, or Form 592-V
in these regulations shall also refer to corresponding electronic filings and
payments.
(4) Withholding
Adjustments. If a withholding agent discovers that an amount was withheld in
error, the withholding agent may file an amended FTB Form 592, FTB Form
592-PTE, or FTB Form 592-F showing the proper amount of withholding on the
payment and either make an additional remittance using FTB Form 592-A, FTB Form
592-Q, or FTB Form 592-V, or request a refund or credit of the erroneously
withheld amount to be refunded or credited either to the withholding agent or
to the payee, as appropriate. If the withholding agent requests that the
erroneously withheld amount be retained as a credit against the withholding
agent's future withholding obligations (in cases where the withholding agent
has repaid the erroneously withheld funds to the payee), the Franchise Tax
Board will retain the withholding amount in the name of the withholding agent
who can then apply the excess withholding on a later period remittance as a
prior payment.
(d)
Interest and Penalties.
(1) Interest. Revenue
and Taxation Code section
18668,
subdivision (b), requires the Franchise Tax Board to compute and assess
interest on any amount not paid on or before the due date required by
regulations, at the rate established pursuant to Revenue and Taxation Code
section
19521,
computed from the due date to the date paid. This interest is not a penalty,
but compensation for the use of the funds from the date the withheld funds were
due to the date remitted.
(2)
Penalties and Liabilities.
(A) Information
Return and Payee Statement Penalties. Revenue and Taxation Code section
19183
incorporates federal information return and payee statement penalties by
reference. FTB Form 592, FTB Form 592-PTE, FTB Form 592-F, and FTB Form 593 are
information returns. FTB Form 592-B is a payee statement. Failure to file these
returns and statement may subject the withholding agent or remitter to
information return and/or payee statement penalties as specified in Regulation
sections
18662-0 through
18662-8.
(B) Real Estate Information Return Penalties.
A penalty may be assessed if the remitter fails to file a correct FTB Form 593
between the due date and 30 days after the due date. The penalty increases if a
correct FTB Form 593 is filed more than 30 days following the due date, and
again more than 6 months following the due date, or if a correct FTB Form 593
is never filed.
If the noncompliance is due to an intentional disregard
of the requirements of Regulation sections
18662-0 through
18662-8, the penalty assessed
shall be consistent with Internal Revenue Code section
6721(e) and (f).
The penalty is for each FTB Form 593 that the remitter does not file correctly
by the due date.
(C)
Liability of Withholding Agent for Required Withholding. Revenue and Taxation
Code section
18668,
subdivision (a), provides that a withholding agent is liable for the amount
that was required to be withheld, and applicable penalties and interest, unless
it is shown that the failure was due to reasonable cause.
When the withholding agent pays the liability under
subsection (d)(2)(C) for required withholding and information return penalties
and interest, and the nonresident payee subsequently files a return and pays
the tax, Franchise Tax Board may reverse the liability for required withholding
upon written request by the withholding agent; however, the withholding agent
remains liable for any information return penalties and
interest.
(D) Special Rules
for Real Estate Withholding.
1. Real Estate
Notification and Withholding Penalties. The penalty for not properly notifying
buyers/transferees is the greater of $500 or 10 percent of the required
withholding. The penalty for failing to withhold is the greater of $500 or 10
percent of the required withholding. If the failure to withhold is shown to be
due to reasonable cause, the Franchise Tax Board will withdraw the
penalty.
2. Real Estate Information
Returns and False Exemption Certificates. The remitter may be subject to a
penalty that is consistent with Internal Revenue Code section
6721(a) and, if
applicable, (b) if the remitter does not provide the sellers/transferors with
correct copies of FTB Form 593 by the due date. If the noncompliance is due to
an intentional disregard of the requirements set forth in Regulation sections
18662-0 through
18662-8, the penalty assessed
shall be consistent with Internal Revenue Code section
6721(e) and (f).
The penalty is for each FTB Form 593 that is not furnished. FTB Form 593 is
considered correct when all applicable fields are completed, the information is
correct, and the correct version of the form is used. The Franchise Tax Board
will make available on its website at
www.ftb.ca.gov and will designate the proper
version of FTB Form 593 for each year. The pre-printed year on FTB Form 593
must match the year the transaction occurred. For sales, this is the year
escrow closed. For installment payments, this is the year of the installment
payment. For exchanges, this is the year the last requirement of the exchange
was completed or when it was determined that the exchange would not meet the
Internal Revenue Code section
1031 requirements and any cash or
cash equivalent was distributed to the seller/transferor. If the
seller/transferor knowingly certifies to a false exemption on FTB Form 593, the
seller/transferor may be subject to a penalty of the greater of $1,000 or 20
percent of the required withholding.
(e) Other Information Returns. The Franchise
Tax Board may prescribe in writing when other information returns and
withholding statements must be provided to the payee and/or to the Franchise
Tax Board.
(f) Coordination With
Group Returns. Except as set forth in Revenue and Taxation Code sections
18534
and
18536,
withholding of tax is allowed as a credit against the tax shown on a group
nonresident return.
(g) FTB Form
593, Real Estate Withholding Tax Statement. See Regulation section
18662-3, subsection (h).
(h) FTB Form 593-V, Payment Voucher for Real
Estate Withholding. See Regulation section
18662-3, subsection (i).
(i) FTB Form 592, Resident and Nonresident
Withholding Statement. See Regulation section
18662-4, subsection (i).
(j) FTB Form 592-V, Payment Voucher for
Resident or Nonresident Withholding. FTB Form 592-V shall contain the following
information:
(1) A check box to indicate how
FTB Form 592 was submitted, by one of two methods (electronic or
paper).
(2) Total number of payees
reported on FTB Form 592-V.
(3)
Withholding Agent information, which includes the business and/or individual
name, identification number (SSN or ITIN, FEIN, California corporation number,
or California Secretary of State (SOS) file number), telephone number, and
withholding agent's address.
(4)
Amount of payment submitted with FTB Form 592-V.
(5) A check box to indicate the types of
income being reported: Payment to Independent Contractor; Trust Distributions;
Rents or Royalties; Estate Distributions; Elective Withholding; Elective
Withholding/Indian Tribe; or Other. For "Other," an explanation must be
provided.
(k) FTB Form
592-PTE, Pass-Through Entity Annual Withholding Return. See Regulation section
18662-4, subsection (j).
(l) FTB Form 592-Q, Payment Voucher for
Pass-Through Entity Withholding. FTB Form 592-Q shall contain the following
information:
(1) A check box to indicate how
FTB Form 592-PTE was submitted, by one of two methods (electronic or
paper).
(2) Total number of payees
reported on FTB Form 592-Q.
(3)
Withholding Agent information, which includes the business and/or individual
name, identification number (SSN or ITIN, FEIN, California corporation number,
or SOS file number), telephone number, and withholding agent's
address.
(4) Amount of payment
submitted with FTB Form 592-Q.
(m) FTB Form 592-F, Foreign Partner or Member
Annual Withholding Return. See Regulation section
18662-4, subsection (k).
(n) FTB Form 592-A, Payment Voucher for
Foreign Partner or Member Withholding. FTB Form 592-A shall contain the
following information:
(1) On the supplemental
voucher, a check box to indicate how FTB Form 592-F was submitted, by one of
two methods (electronic or paper).
(2) A space to indicate the month, day, and
year of the start of the partnership's or LLC's calendar or fiscal
year.
(3) A space to indicate the
month, day, and year of the end of the partnership's or LLC's calendar or
fiscal year.
(4) Withholding Agent
information, which includes the business name, identification number (FEIN,
California corporation number, or SOS file number), contact name at the
business, telephone number, and address.
(5) Amount of payment submitted with FTB Form
592-A.
(o) FTB Form
592-B, Resident and Nonresident Withholding Tax Statement. FTB Form 592-B shall
contain the following information:
(1) A check
box indicating whether the form is filed as an amended FTB Form
592-B.
(2) Withholding Agent
information, which includes name, identification number (SSN or ITIN, FEIN,
California corporation number, or SOS file number), address, and telephone
number.
(3) Payee information,
which includes name, identification number (SSN or ITIN, FEIN, California
corporation number, or SOS file number), and address.
(4) A check box to indicate the types of
income being reported: Payment to Independent Contractors; Trust Distributions;
Rents or Royalties; Distributions to Domestic Nonresident Partners, Members,
Beneficiaries, or S Corporation Shareholders; Estate Distributions; Elective
Withholding; Elective Withholding/Indian Tribe; Allocations to Foreign
(non-U.S.) Nonresident Partners/Members; or Other. For "Other," an explanation
must be provided.
(5) Total amount
subject to withholding.
(6) Total
resident and/or nonresident tax withheld (excluding backup
withholding).
(7) Total backup
withholding.