Fillable Form 587 Ca , 2009 (Page 2 of 3) in pdf

Instructions for Form 587

Nonresident Withholding Allocation Worksheet

References in these instructions are to the California Revenue and Taxation Code (R&TC).

General Information

to nonresidents of California for personal

Payments not subject to withholding

services performed in California and for

include payments:

Beginning January 1, 2008, domestic

rents and royalties on property located in

• To a resident of California or to a

nonresidents may use Form 589,

California . The withholding rate is seven

corporation with a permanent place of

Nonresident Request for Reduced

percent unless the FTB grants a waiver .

business in California .

Withholding, to request the reduction in

See General Information E, Waivers .

• To a corporation qualified to do

the standard seven percent withholding

business in California .

amount that is applicable to California

C When to File This Form

• To a partnership or LLC that has

source payments made to nonresidents .

a permanent place of business in

The withholding agent requests that the

Private Mail Box

California .

vendor/payee completes, signs, and

Include the Private Mail Box (PMB) in the

• For sale of goods .

returns Form 587 when a contract is

address field . Write “PMB” first, then the

• For income from intangible personal

entered into or before payment is made to

box number . Example: 111 Main Street

property, such as interest and

the vendor/payee .

PMB 123 .

dividends, unless the property has

Form 587 remains valid for the duration

acquired a business situs in California .

A Purpose

of the contract (or term of payments),

• For services performed outside of

provided there is no material change

Use Form 587, Nonresident Withholding

California .

in the facts . By signing Form 587, the

Allocation Worksheet, to determine if

• To a vendor/payee that is a tax-exempt

vendor/payee agrees to promptly notify

withholding is required on payments to

organization under either California or

the withholding agent of any changes in

nonresidents .

federal law .

the facts .

• Representing wages paid to employees .

The vendor/payee completes, signs, and

Wage withholding is administered

returns Form 587 to the withholding

D Withholding Requirements

by the California Employment

agent . The withholding agent relies on the

Development Department (EDD) . For

certification made by the vendor/payee

Payments made to nonresident

more information, contact your local

to determine if withholding is required,

vendors/payees (including individuals,

EDD office .

provided the completed and signed

corporations, partnerships, LLCs, estates,

• To reimburse a vendor/payee

Form 587 is accepted in good faith . Retain

and trusts) are subject to withholding .

for expenses relating to services

the completed Form 587 for your records,

However, no withholding is required

performed in California if the

and provide a copy to the Franchise Tax

if total payments of California source

reimbursement is separately accounted

Board (FTB) upon request .

income to the vendor/payee during the

for and not subject to federal

calendar year are $1,500 or less .

Do not use Form 587 if any of the

Form 1099 reporting . Corporate

following applies:

If the California resident, qualified

vendor/payees, for purposes of this

corporation, LLC, or partnership is

• Payment to a nonresident is only for

exception, are treated as individual

acting as an agent for the nonresident

the purchase of goods .

persons .

vendor/payee, the payment is subject to

• You sold California real estate . Use

withholding if the nonresident vendor/

Form 593-C, Real Estate Withholding

E Waivers

payee does not meet any of the exceptions

Certificate .

on Form 590 .

A nonresident vendor/payee may request

• The vendor/payee is a resident of

that withholding be waived . To apply

California or is a non-grantor trust that

Payments subject to withholding include

for a withholding waiver, use Form 588,

has at least one California resident

the following:

Nonresident Withholding Waiver Request .

trustee . Use Form 590, Withholding

• Payments for services performed in

If the FTB has granted a waiver, you must

Exemption Certificate .

California by nonresidents .

attach a copy of FTB’s determination letter

• The vendor/payee is a corporation,

• Payments made in connection with a

to Form 587 .

partnership, or limited liability

California performance .

company (LLC) that has a permanent

• Rent paid to nonresidents if the rent is

place of business in California or is

F Requirement to File a

paid in the course of the withholding

qualified to do business in California .

California Tax Return

agent’s business .

Use Form 590 .

• Royalties paid to nonresidents for the

A vendor’s/payee’s exemption

• The payment is to an estate and the

right to use natural resources located

certification on Form 587, Form 590,

decedent was a California resident . Use

in California .

or a determination letter from the FTB

Form 590 .

• Payments of prizes for contests

waiving withholding does not eliminate

entered in California .

the requirement to file a California tax

B Requirement

• Distributions of California source

return and pay the tax due . For return

income to nonresident beneficiaries

Revenue and Taxation Code (R&TC)

filing requirements, see the instructions

from an estate or trust .

Section 18662 and the related regulations

for Long or Short Form 540NR, California

• Other payments of California source

require withholding of income or

Nonresident or Part-Year Resident Income

income made to nonresidents .

franchise tax on certain payments made

Tax Return; Form 541, California Fiduciary

Form 587 Instructions 2008 Page 1

Form 587 Ca , 2009 Page 2

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