§ 18662-8. Reporting and Remitting Amounts Withheld, Penalties, and Interest; Other Procedures.
18 CA ADC § 18662-8Barclays Official California Code of Regulations
18 CCR § 18662-8
§ 18662-8. Reporting and Remitting Amounts Withheld, Penalties, and Interest; Other Procedures.
(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.
(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.
(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.
(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.
(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.
(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.
(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.
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.
(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.
Credits
Note: Authority cited: Section 19503, Revenue and Taxation Code. Reference: Sections 18662 and 19183, Revenue and Taxation Code.
History
1. Amendment filed 12-12-67; effective thirtieth day thereafter (Register 67, No. 50).
2. Renumbering from 18662-18810(e) filed 12-14-71; effective upon filing (Register 71, No. 51).
3. Amendment filed 12-20-78; effective thirtieth day thereafter (Register 78, No. 51).
4. Renumbering of Section 18662.5 to Section 18662(h) filed 4-9-81; designated effective 6-30-81 (Register 81, No. 15).
5. Renumbering of Section 18662(h) to Section 18662-8 filed 8-19-82; effective thirtieth day thereafter (Register 82, No. 34).
6. Repealer and new section filed 2-19-86; effective thirtieth day thereafter (Register 86, No. 8).
7. Change without regulatory effect renumbering and amending former section 18805-8 to section 18662-8 filed 11-23-98 pursuant to section 100, title 1, California Code of Regulations (Register 98, No. 48).
8. Repealer and new section heading and section and amendment of Note filed 3-10-2014; operative 7-1-2014 (Register 2014, No. 11).
9. Change without regulatory effect amending subsections (d)(2)(C), (j)(3), (l)(3) and (m)(2)-(3) filed 12-9-2014 pursuant to section 100, title 1, California Code of Regulations (Register 2014, No. 50).
10. Amendment of section and Note filed 10-8-2019; operative 10-8-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 41).
This database is current through 5/10/24 Register 2024, No. 19.
Cal. Admin. Code tit. 18, § 18662-8, 18 CA ADC § 18662-8
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