Instructions For Form 593 - Real Estate Withholding Tax Statement - 2013


Instructions for Form 593
Real Estate Withholding Tax Statement
General Information
If the sellers or transferors are married or
Form 593, Form 593-
, Real Estate Withholding
RDPs and they are entered as one seller or
Installment Sale Acknowledgement, Form
For taxable years beginning on or after
transferor, we treat them as having equal
593-V, a copy of the promissory note, and
January 1, 2012, the maximum personal
ownership interest. If the ownership interest
the amount of tax withheld. For subsequent
income tax rate is 12.3%. In addition,
is not equal, separate Forms 593 need to
installment payments, the buyer should file
non-California partnerships are subject
be filed for each individual to represent the
a copy of only Form 593 and Form 593-V
to withholding requirements on a sale
correct ownership interest percentage. If
along with the amount of tax withheld. You do
of California real property at a rate of
the information submitted is incorrect, an
not need to obtain the seller's or transferor's
% (.0333) of sales price or 12.3% of
amended Form 593 must be submitted to the
signature on each subsequent and completed
gain. The alternative withholding rate for
FTB by the withholding agent.
Form 593.
the gain on sale of California real property
Use Form 593-V, Payment Voucher for Real
Mail forms and payment for the amount of tax
by S corporations is 13.8% and 15.8% for
Estate Withholding, to remit real estate
withheld within 20 days following the end of
Financial S corporations.
withholding payments to the FTB. Form
the month in which the transaction occurred.
Do Not Round Cents to Dollars – On this form,
593-V should be used whether Form(s) 593,
Mail to:
do not round cents to the nearest whole dollar.
is submitted electronically or by mail. The
Enter the amounts with dollars and cents as
withholding agent must use Form 593-V when
PO BOX 942867
actually withheld.
remitting a payment by check or money order.
SACRAMENTO CA 94267-0651
Installment Sales – The withholding agent is
Payments may also be automatically withdrawn
Distribute the other two copies of Form 593
required to report as an installment sale (check
from a bank account via an electronic funds
as follows:
box B, Installment Sale Payment, on Line 3) if
transfer (EFT).
the transaction is structured as an installment
• Send one copy to seller or transferor within
sale as evidenced by a promissory note. The
B Helpful Hints
20 days following the end of the month in
withholding agent is required to withhold
which the transaction occurred.
Year of Form – The year (at the top) of
% (.0333) of the first installment payment.
• One copy will be retained by the withholding
Form 593 must be the same as the year on
agent for a minimum of five years and must
Buyers are required to withhold on the
line 2. See instructions for line 2. If you do not
be provided to the FTB upon request.
principal portion of each subsequent
have Form 593 with the correct year, go to
installment payment if the sale of California real to get the correct form.
E Interest and Penalties
property is structured as an installment sale.
Identification Numbers – Check to see that the
Interest will be assessed on late withholding
Withhold on Installment Sale Elect-out
withholding agent’s and seller’s or transferor's
payments and is computed from the due date
Method – If the seller or transferor elects not
identification numbers are correct and listed
to report the sale on the installment method
to the date paid. If the REEP does not notify
in the same order as the names. If both a
the buyer of the withholding requirements in
(Internal Revenue Code Section 453[d]),
husband/RDP and wife/RDP are listed, make
writing, the penalty is the greater of $500 or
the seller or transferor must file a California
sure both social security numbers (SSNs)
10% of the required withholding.
tax return and report the entire sale on
or individual taxpayer identification numbers
Schedule D-1, Sale of Business Property. After
If after notification, the buyer or other
(ITINs) are listed in the same order as their
filing the tax return and reporting the entire
withholding agent does not withhold, the
gain, the seller or transferor must submit a
penalty is the greater of $500 or 10% of the
Trusts and Trustees – It is important to report
written request to the Franchise Tax Board
required withholding.
the correct name and identification number
(FTB) to release the buyer from withholding
If the withholding agent does not furnish
when title is held in the name of a trust. If the
on the installment sale payments. Once the
complete and correct copies of Form 593 to
seller or transferor is a trust, see the Specific
request is received, FTB will issue an approval
the seller or transferor by the due date, the
Instructions on page 2, Part II, Seller or
or denial within 30 days.
penalty is $50 per Form 593. If the failure
Registered Domestic Partners (RDP) – For
is due to an intentional disregard of the
Preparer’s Name and Title/Escrow Business
purposes of California income tax, references
requirement, the penalty is the greater of $100
Name – Provide the preparer’s name and
to a spouse, husband, or wife also refer to a
or 10% of the required withholding.
title/escrow’s business name and phone
California RDP, unless otherwise specified.
We assess a penalty for failure to file complete,
When we use the initials RDP they refer to both
correct, and timely information returns. The
a California registered domestic “partner” and
C Who Must File
penalty is calculated per seller:
a California registered domestic “partnership,”
• $15 if filed 1 to 30 days after the due date.
as applicable. For more information on
Any real estate escrow person (REEP) who
• $30 if filed 31 days to 6 months after the
RDPs, get FTB Pub. 737, Tax Information for
withheld on the sale or transfer of California
due date.
Registered Domestic Partners.
real property must file Form 593 to report the
• $50 if filed more than 6 months after the due
amount withheld. If this is an installment sale
A Purpose
payment after escrow closed, then the buyer is
(R&TC Section 19183)
the responsible person.
Use Form 593, Real Estate Withholding Tax
If the failure is due to an intentional disregard
Statement, to report real estate withholding on
D When and Where to File
of the requirement, the penalty is the greater of
sales closing in 2014, on installment payments
$100 or 10% of the required withholding.
made in 2014, or on exchanges that were
You need three completed copies of Form
completed or failed in 2014.
593 for filing and distribution. File a copy of
F Amending Form 593
Form 593 and Form 593-V, along with the
Use a separate Form 593 to report the amount
amount of tax withheld and mail to the address
An amended Form 593 can only be filed by
withheld from each seller or transferor. If the
shown in this section.
the withholding agent. If a seller or transferor
sellers or transferors are married or RDPs and
notices an error, the seller or transferor should
they plan to file a joint return, include both
For installment sales, with the principal portion
contact the withholding agent.
spouses/RDPs on the same Form 593.
of the first installment payment, file a copy of
Form 593 Instructions 2013 Page 1


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