Instructions For Form 593 Advance Draft - Real Estate Withholding Tax Statement

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Instructions for Form 593
Real Estate Withholding Tax Statement
What’s New
B Who Must File
Requirements. If you are the preparer for more
than one withholding agent, provide a separate
Do Not Round Cents to Dollars – On this form,
Any person who withheld on the sale or
electronic file for each withholding agent. For
do not round cents to the nearest whole dollar.
transfer of California real property during the
electronic filing submit your payment using
Enter the amounts with dollars and cents as
calendar month must file Form 593 to report,
Electronic Funds Transfer (EFT) or Form 593-V,
actually withheld.
and Form 593-V to remit the amount withheld.
Payment Voucher for Real Estate Withholding.
Normally, this will be the title company, escrow
When remitting payments by EFT, mail a copy
company, intermediary, or accommodator.
General Information
of Form 593 to the following address:
Generally, the buyer will only complete these
forms when reporting the withholding on
FRANCHISE TAX BOARD
For taxable years beginning on or after
installment payments.
PO BOX 942867
January 1, 2011, the maximum personal
SACRAMENTO CA 94267-8888
income tax rate is 9.3%. In addition, non-
C When and Where to File
California partnerships are subject to
A Purpose
withholding requirements on a sale of California
You need three completed copies of Form 593
real property at a rate of 3 1/3% (.0333) of
for filing and distribution. On the principal
Use Form 593 to report real estate withholding
sales price or 9.3% of gain. The alternative
portion of the first installment payment, file a
on sales closing in 2013, on installment
withholding rate for the gain on sale of
copy of Form 593, Form 593-I, and Form 593-V,
payments made in 2013, or on exchanges that
California real property by S corporations is
including a copy of the promissory note, and
were completed or failed in 2013.
10.8% and 12.8% for Financial S corporations.
pay the amount of tax withheld within 20 days
Use a separate Form 593 to report the amount
following the end of the month in which the
Withhold on Installment Sale Elect-out
withheld from each seller. If the sellers are
transaction occurred. Mail to:
Method – If the seller elects not to report
married or RDPs and they plan to file a joint
the sale on the installment method (Internal
FRANCHISE TAX BOARD
return, include both spouses/RDPs on the same
Revenue Code Section 453[d]), the seller
PO BOX 942867
Form 593.
must file a California tax return and report
SACRAMENTO CA 94267-0651
If the sellers are married or RDPs and they are
the entire sale on Schedule D-1, Sale of
Distribute the other two copies of Form 593
entered as one seller, we treat them as having
Business Property. After filing the tax return
as follows:
equal ownership interest. If the ownership
and reporting the entire gain, the seller must
interest is not equal, separate Forms 593 need
• Send one copy to sellers within 20 days
submit a written request to the Franchise
to be filed for each individual to represent the
following the end of the month in which the
Tax Board (FTB) to release the buyer from
correct interest percentage. If the information
transaction occurred.
withholding on the installment sale payments.
submitted is incorrect, an amended Form 593
• One copy will be retained by the withholding
Once the request is received, FTB will issue an
must be submitted to the FTB by the
agent for a minimum of five years and must
approval or denial within 30 days.
withholding agent.
be provided to the FTB upon request.
Installment Sales – For installment sales
Use Form 593-V to remit your real estate
occurring on or after January 1, 2009, buyers
D Interest and Penalties
withholding payment to the FTB when
are required to withhold on the principal
Form(s) 593 is submitted electronically or by
Interest will be assessed on late withholding
portion of each installment payment if the sale
mail. You must use Form 593-V when remitting
payments and is computed from the due
of California real property is structured as an
a payment by check or money order. You
date to the date paid. If the real estate
installment sale.
may also have your payments automatically
escrow person does not notify the buyer of
Registered Domestic Partners (RDP) – For
withdrawn from your bank account via EFT.
the withholding requirements in writing, the
purposes of California income tax, references
penalty is the greater of $500 or 10% of the
Common Errors
to a spouse, husband, or wife also refer to a
required withholding.
Year of Form – The year (at the top) of
California RDP, unless otherwise specified.
If the buyer (after notification) or other
Form 593 must be the same as the year on
When we use the initials RDP they refer to both
withholding agent does not withhold, the
line 2. See instructions for line 2. If you do not
a California registered domestic “partner” and
penalty is the greater of $500 or 10% of the
have Form 593 with the correct year, go to
a California registered domestic “partnership,”
required withholding.
ftb.ca.gov to get the correct form.
as applicable. For more information on
RDPs, get FTB Pub. 737, Tax Information for
If the withholding agent does not furnish
Identification Numbers – Check to see that the
Registered Domestic Partners.
complete and correct copies of Form 593 to
withholding agent’s and seller’s identification
the FTB by the due date, but does file them
numbers are correct and listed in the same
Electronic Filing Requirements – Form 593,
within 30 days of the due date, the penalty is
order as the names. If both a husband/RDP
Real Estate Withholding Tax Statement,
$15 per Form 593. If Form 593 is filed more
and wife/RDP are listed, make sure both social
information may be filed with the FTB
than 30 days but less than 180 days after the
security numbers (SSNs) or individual taxpayer
electronically, using FTB’s Secure Web Internet
due date, the penalty is $30 per Form 593. If
identification numbers (ITINs) are listed in the
File Transfer (SWIFT), instead of paper.
Form 593 is filed more than 180 days after the
same order as their names.
However, withholding agents must continue
due date, the penalty is $50 per Form 593. If
to provide the seller or transferor with paper
Trusts and Trustees – It is important to report
the failure is due to an intentional disregard of
Form 593.
the correct name and identification number
the requirement, the penalty is the greater of
when title is held in the name of a trust. If
For electronic filing, submit your file using the
$100 or 10% of the required withholding.
the seller is a trust, see the Specific Line
SWIFT process as outlined in FTB Pub. 923,
If the withholding agent does not furnish
Instructions on page 2 for Seller or Transferor.
Secure Web Internet File Transfer (SWIFT)
complete and correct copies of Form 593 to the
Guide for Resident, Nonresident, and Real
Preparer’s Name and title/Escrow Business
seller by the due date, the penalty is $50 per
Estate Withholding.
Name – Provide the preparer’s name and
Form 593. If the failure is due to an intentional
title/escrow’s business name and phone
For the required file format and record layout
disregard of the requirement, the penalty is
number.
for electronic filing, get FTB Pub. 1023R, Real
the greater of $100 or 10% of the required
Estate Withholding Electronic Submission
withholding.
Form 593 2012 Page 1

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