Instructions For Form 593 - Real Estate Withholding Tax Statement

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

FRANCHISE TAX BOARD

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Payments may also be automatically withdrawn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

ftb.ca.gov 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

names.

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

Transferor.

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,

number.

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

date.

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

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

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