California Form 589 Draft - Nonresident Reduced Withholding Request

Instructions for Form 589

Nonresident Reduced Withholding Request

General Information

Part I – Vendor/Payee

• Any trust without a resident grantor,

beneficiary, or trustee, or estates where

Beginning January 1, 2008:

Enter the identification number, name, and

the decedent was not a California

address for the vendor/ payee who will be

• Domestic nonresidents may request a

resident.

performing the services. Include the Doing

reduction in the standard seven percent

• “Foreign” refers to non-U.S.

Business As (DBA), in this field, if you are an

withholding amount that is applicable

B When and Where to File

entertainer and performing under a different

to California source payments made to

name. Include the Private Mail Box (PMB)

nonresidents.

The vendor/payee must submit Form 589

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

• Tax withheld on California source payments

to the FTB before receiving payment for

the box number. Example: 111 Main Street

to domestic nonresidents is remitted

services. Form 589 is a request for a reduced

PMB 123.

to the Franchise Tax Board (FTB) on a

withholding amount and does not guarantee

Foreign Address: Enter the information in

quarterly basis (similar to estimate tax

the domestic nonresident vendor/payee a

the following order: City, Country, Province/

payments). For more information, see

reduction in withholding unless approved

Region, and Postal Code. Follow the country’s

the new Form 592, Quarterly Nonresident

by the FTB prior to the payment for services

practice for entering the postal code. Do not

Withholding Statement.

being performed. Allow 10 business days for

abbreviate the country’s name.

Round Cents To Dollars – Round cents to

processing. Submit requests to:

Part II – Withholding Agent

the nearest whole dollar. For example, round

WITHHOLDING SERVICES AND

$50.50 up to $51 or round $25.49 down to

COMPLIANCE

Enter the withholding agent’s name,

$25. If you do not round, the FTB will disregard

FRANCHISE TAX BOARD

identification number, and address. The

the cents. This helps process your return

PO BOX 942867

withholding agent is the party that will be

quickly and accurately.

SACRAMENTO CA 94267-0651

providing payment to the vendor/payee for

services performed. Include the Private Mail

A Purpose

FAX: 916.845.9512

Box (PMB) in the address field. Write “PMB”

In an effort to accommodate requests as timely

A domestic nonresident taxpayer that can

first, then the box number. Example: 111 Main

as possible, requests for reduced withholding

show that the required seven percent rate

Street PMB 123.

amounts should be received by the FTB at

of withholding will result in excessive

least 10 business days prior to payment for

Part III – Type of Income

withholding, uses Form 589, Nonresident

the services performed. Failure to submit

Reduced Withholding Request, to apply for a

Subject to Withholding

timely requests may result in a seven percent

reduction in the amount to be withheld (see

withholding requirement.

Check the box that reflects the type of payment

R&TC Section 18662).

that will be received for services performed on

Upon receipt of the completed and signed

Do not use Form 589 to request a reduced

the date(s) specified. Check one type only.

Form 589, the FTB will review the request for

withholding amount if you are one of the

a reduced withholding amount. A signature

Date(s) of Service – Enter the date(s) the

following:

is required on Form 589 from the requestor

services are being performed. The dates of

• Foreign (non-U.S.) partner or member.

or vender/payee in order for the FTB to

service should reflect the same taxable year as

There are no provisions in the California

process. The FTB may request to review

shown in the upper left corner of Form 589.

R&TC to waive or reduce withholding for

all relevant documentation including, but

foreign partners or members.

Part IV – Withholding Amount

not limited to, receipts and contracts, in

• Seller of California real estate. Sellers

order to verify the payment and expense

Line 1 – Enter the total gross California source

of California real estate should use

amounts. Upon reviewing the request and

payment the vendor/payee expects to receive

Form 593-C, Real Estate Withholding

supporting documentation, the FTB will make

for performing services. If the vendor/payee

Certificate.

a determination of how much withholding is

and withholding agent have entered into a

Form 589 does not apply to payments for

appropriate for the services performed. Upon

contract for services, this amount should

wages to employees. Wage withholding is

making a determination, the FTB will provide a

match the gross payment.

administered by the California Employment

notice to the vendor/payee and the withholding

Expenses – The vendor/payee should enter

Development Department (EDD). For more

agent with the approved amount to be withheld

any relevant expenses on lines 2-11 that will

information, contact EDD customer service at

on the payment outlined on Form 589. The

be incurred or paid by the vendor/payee for

888.745.3886 or go to their website at

withholding agent will be instructed to withhold

performing the services in California. The

the approved amount and remit to the FTB

FTB may verify the expenses by requesting

with their next Form 592. In addition, the

For California withholding purposes only, a

supporting documentation. Payments the

withholding agent will be instructed to withhold

reference in these instructions to:

vendor/payee makes to nonresident third

and remit seven percent of any payment made

• “Nonresident” includes all of the following:

parties may meet the requirements for

to the vendor/payee in excess of the gross

• Individuals who are not residents of

withholding and remitting seven percent of the

California source payment amount reported on

California.

payment to the FTB.

Form 589.

• Corporations not qualified through the

Line 2 – Advertising

Secretary of State to do business in

Specific Instructions

Enter any advertising expenses that are

California or having no permanent place

directly related to the date(s) of the services

Taxable Year – Make sure the year in the

of business in California.

performed.

upper left corner of Form 589 represents the

• Partnerships or limited liability

taxable year for which the services are being

Line 3 – Commissions and Fees

companies (LLCs) with no permanent

performed.

Enter any commissions and fees paid that are

place of business in California.

directly related to the date(s) of the services

performed.

Form 589 Instructions 2008 Page 1

California Form 589 Draft - Nonresident Reduced Withholding Request - 2009 Page 3

Related Articles

Related forms

Related Categories