California Form 588 Draft - Nonresident Withholding Waiver Request

2015 Instructions for Form 588

Nonresident Withholding Waiver Request

General Information

D Length of Waiver

• The payment is for goods. Get Form 587,

Nonresident Withholding Allocation

Withholding waivers are effective for a

A Purpose

Worksheet.

maximum term of 24 months. If the waiver is

• The payment is being made to a resident of

Use Form 588, Nonresident Withholding

granted and effective for a period of 12 months

California, an S corporation, a partnership,

Waiver Request, to request a waiver from

or less, the waiver will expire on December 31

or a limited liability company (LLC), that

withholding on payments of California source

of the same calendar year. If the waiver is

has a permanent place of business in

income to nonresident payees.

granted and effective for a period of 13 to 24

California. Get Form 590, Withholding

months, the waiver will expire on December 31

Do not use Form 588 to request a waiver if you

Exemption Certificate.

of the succeeding calendar year.

are a Foreign (non-U.S.) partner or member.

• The withholding agent’s California source

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

If the waiver is granted for Reason B or D, the

income to the payee does not exceed

may file a Form 589, Nonresident Reduced

resulting waiver will expire at the end of the

$1,500 for the calendar year.

Withholding Request, to reduce or eliminate

calendar year granted.

• The payments are for income from

a partner’s withholding of California tax on

intangible personal property, such as

If the waiver is granted for Reason A, C, or E,

effectively connected taxable income (ECTI)

interest and dividends, unless derived in

the resulting waiver will expire at the end of the

from California sources, however a foreign

a trade or business or the property has

succeeding calendar year granted, with limited

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

acquired a business situs in California.

exceptions.

a withholding waiver.

• The payments are for services performed

E Income Subject to

outside of California or for rents, royalties,

Do not use Form 588 to request a waiver if you

and leases on property located outside of

are a Seller of California real estate. Sellers of

Withholding

California.

California real estate should use Form 593-C,

The items of income subject to withholding

• The payment is to a nonresident corporate

Real Estate Withholding Certificate, to claim an

include, but are not limited to:

director for director services, including

exemption.

attendance at board meetings.

• Compensation for services performed in

Form 588 does not apply to payments subject

• The payee is a tax-exempt organization

California by nonresidents.

to backup withholding. For information on

under either California or federal law.

• Rent paid to nonresidents on real or

California backup withholding, go to

• The payee has a completed and signed

personal property located in California if the

ftb.ca.gov and search for backup withholding.

Form 590-P, Nonresident Withholding

rent is paid in the course of the withholding

Form 588 does not apply to payments for

Exemption Certificate for Previously

agent’s business.

wages to employees. Wage withholding is

Reported Income.

• Royalties from natural resources paid to

administered by the California Employment

• The income is derived from qualified

nonresidents from business activities in

Development Department (EDD). For more

investment securities of an investment

California.

information, go to edd.ca.gov or call

partnership.

• Distributions of California source taxable

888.745.3886.

income to nonresident beneficiaries from

G When and Where to File

an estate or trust.

B Requirement

• Distributions of California source taxable

Submit your request for a waiver at least 21

California Revenue and Taxation Code (R&TC)

income to a domestic (nonforeign)

business days before making a payment to

Section 18662 requires withholding 7% of

nonresident S corporation shareholder,

allow the FTB time to process your request.

income or franchise tax on certain payments

partner, or member.

Mail Form 588 to:

made to nonresidents for income received

• Allocations of California source income

WITHHOLDING SERVICES AND

from California sources unless an approved

or gain to foreign (non-U.S.) nonresident

COMPLIANCE MS F182

waiver or reduction is issued. The withholding

partners or members.

FRANCHISE TAX BOARD

rate is 7% unless a waiver is granted by the

• Prizes and winnings received by

PO BOX 942867

Franchise Tax Board (FTB).

nonresidents for contests in California.

SACRAMENTO CA 94267-0651

• Endorsement payments received for

C Withholding Waivers

services performed in California.

• Other California source income paid to

The FTB issues a Waiver Determination

Fax to: 916.845.9512

nonresidents.

Notice for each waiver request. A withholding

H Requirement to File a

agent must have received the notice

For more information on income subject to

authorizing a waiver of withholding before

California Tax Return

withholding, get FTB Pub. 1017, Resident and

eliminating withholding on payments made

Nonresident Withholding Guidelines.

A payee’s waiver determination notice on Form

to nonresidents. The withholding agent

F Exceptions to Withholding

588 does not eliminate the requirement to file a

retains the Waiver Determination Notice for a

California tax return and pay the tax due.

minimum of four years and must furnish the

Withholding is not required when:

notice to the FTB upon request.

You may be assessed a penalty if:

• The payee is a government or any of its

Withholding waivers issued by the FTB apply

• You do not file a California tax return.

agencies or instrumentalities, a state or

only for the limited purpose of determining

• You file your tax return late.

any of its political subdivisions, a foreign

the withholding obligation under R&TC

• The amount of withholding does not satisfy

government or any of its subdivisions,

Section 18662. They do not apply to the

your tax liability.

agencies, or instrumentalities. Do not use

taxability of income.

Form 588 to request a waiver.

For more information on California filing

requirements, go to ftb.ca.gov.

Form 588 Instructions 2014 Page 1

California Form 588 Draft - Nonresident Withholding Waiver Request - 2015 Page 4

Related Articles

Related forms

Related Categories