California Form 589 Draft - Nonresident Reduced Withholding Request

Instructions for Form 589

Nonresident Reduced Withholding Request

General Information

Partner-Level Items to Reduce Section 1446

The FTB may request to review all relevant

Withholding, to the partnership. The foreign

documentation including, but not limited to,

Form 589, Nonresident Reduced Withholding

partner must sign and send Form 589 to

receipts and contracts, in order to verify the

Request, is a request for a reduced withholding

the FTB along with a signed copy of federal

payment and expense amounts. Upon review

amount and does not guarantee the

Form 8804-C. The FTB will review the request

of the request and supporting documentation,

nonresident payee a reduction in withholding

within 21 business days. If the request is

the FTB will make a determination of how

unless approved by the Franchise Tax Board

approved, the partnership should remit the

much withholding is appropriate for the

(FTB) prior to the payment for services being

reduced withholding amount to the FTB along

services performed. The FTB will provide

performed.

with Form 592-A, Payment Voucher for Foreign

a determination letter to the payee and the

A nonresident taxpayer has the option to

Partner or Member Withholding.

withholding agent with the approved amount

use Form 589 to apply for a reduction in the

to be withheld on the payment outlined on

A foreign (non U.S.) partner or member may

amount to be withheld (see Revenue and

Form 589.

file a Form 589, to reduce or eliminate a

Taxation Code (R&TC) Section 18662).

partner’s withholding of California tax on ECTI

The payee should retain this form and the

Withholding is optional, at the discretion of

from California sources, however a foreign

determination letter for a minimum of four

the withholding agent, on the first $1,500

(non-U.S.) partner or member may not request

years and must provide them to the FTB upon

in payments made during the calendar year.

a withholding waiver.

request.

Withholding must begin as soon as the total

Form 589 does not apply to payments of

C Amending Form 589

payments of California source income for the

backup withholding. For more information on

calendar year exceed $1,500.

California backup withholding, go to ftb.ca.gov

Amended forms can only be filed by the payee.

Tax withheld on California source payments

and search for backup withholding.

To amend Form 589:

to nonresidents are remitted to the FTB in

Form 589 does not apply to payments for

• Complete a new Form 589 for the

four payment periods (similar to estimate

wages to employees. Wage withholding is

appropriate year with the correct

tax payments). For more information,

administered by the California Employment

information.

get Form 592, Resident and Nonresident

Development Department (EDD). For more

• Write “Amended” at the top of the amended

Withholding Statement.

information, call at 888.745.3886 or go to

form.

For California withholding purposes,

edd.ca.gov.

• Include a letter explaining what changes

nonresident includes all of the following:

were made and why.

B When and Where to File

• Send the amended form and letter to the

• Individuals who are not residents of

address listed under General Information B,

California.

The payee must complete and submit

When and Where to File.

• Corporations not qualified through the

Form 589 to the FTB before receiving payment

Secretary of State to do business in

for services.

Specific Instructions

California or having no permanent place of

Form 589 can be submitted online. If you

business in California.

file Form 589 online and you need to submit

Use black or blue ink to complete this form.

• Partnerships or limited liability companies

additional documentation, (i.e. federal

Taxable Year – Make sure the year in the

(LLCs) with no permanent place of

Form 8804-C, federal Schedule E (Form

upper left corner of Form 589 represents the

business in California.

1040), Supplemental Income and Loss

taxable year for which the services are being

• Any trust without a resident grantor,

expense breakdown, etc.), you must fax the

performed.

beneficiary, or trustee, or estates where the

documentation to us at 916.845.9512. On the

decedent was not a California resident.

Private Mail Box (PMB) – Include the PMB

fax containing your documentation, you must

in the address field. Write “PMB” first, then

Foreign refers to non-U.S.

include your name, Taxpayer Identification

the box number. Example: 111 Main Street

Number (TIN), and the confirmation number

Do Not Round Cents to Dollars – On this form,

PMB 123.

of your online Form 589 submission. For

do not round cents to the nearest whole dollar.

Foreign Address – Enter the information in

more information about Form 589 online

Enter the amounts with dollars and cents as

the following order: City, Country, Province/

submission, go to ftb.ca.gov and search for

actually withheld.

Region, and Postal Code. Follow the country’s

589 online.

A Purpose

practice for entering the postal code. Do not

Allow 10 business days for processing online

abbreviate the country’s name.

filing.

Use Form 589 to request a reduction in the

You must provide an acceptable TIN as

standard 7% withholding amount that is

Submit requests by mail to:

requested on this form. The following are

applicable to California source payments made

WITHHOLDING SERVICES AND

acceptable TINs: social security number (SSN);

to nonresidents.

COMPLIANCE

individual taxpayer identification number

Do not use Form 589 to request a reduced

FRANCHISE TAX BOARD

(ITIN); federal employer identification number

withholding amount if you are a seller of

PO BOX 942867

(FEIN); California corporation number (CA Corp

California real estate. Sellers should use

SACRAMENTO CA 94267-0651

no.); or California Secretary of State (CA SOS)

Form 593-C, Real Estate Withholding Certificate.

Allow 21 business days for processing.

file number.

A foreign partner may request to reduce

For timely processing, requests for reduced

Part I – Withholding Agent

or eliminate withholding of California tax

withholding amounts submitted by mail should

on effectively connected taxable income

Enter only business or individual information,

be received by the FTB at least 21 business

(ECTI) from California sources allocable to a

not both, and check the appropriate TIN box.

days prior to payment for the services

foreign partner (Federal Treasury Regulation

The withholding agent is the party that will be

performed. Failure to submit timely requests

1.1446-6). The foreign partner must first sign

providing payment to the payee for services

may result in a 7% withholding requirement.

and send federal Form 8804-C, Certificate of

performed.

Form 589 Instructions 2013 Page 1

California Form 589 Draft - Nonresident Reduced Withholding Request - 2014 Page 3

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