California Form 588 - Nonresident Withholding Waiver Request - 2013 Page 3
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4Instructions for Form 588
Nonresident Withholding Waiver Request
Important Information
D Exceptions to Withholding
• Compensation for services performed
in California by nonresidents (including
Beginning January 1, 2011, we began applying
Withholding is not required when:
payment of expenses). For more
Federal Treasury Regulation 1.1446‑6 procedures
• The payment is for goods.
information, get FTB Pub. 1017, Resident
to reduce or eliminate withholding of California
• The payment is being made to a resident of
and Nonresident Withholding Guidelines.
tax on effectively connected taxable income
California, an S corporation, a partnership,
• Rent paid to nonresidents on real or
(ECTI) from California sources allocable to a
or a limited liability company, (LLC),
personal property located in California if the
foreign partner. The foreign partner must first
that has a permanent place of business
rent is paid in the course of the withholding
sign and send federal Form 8804‑C to the
in California. Form 590, Withholding
agent’s business.
partnership. The foreign partner must sign
Exemption Certificate, can be used by
• Royalties paid to nonresidents from
and send Form 589, Nonresident Reduced
payees to certify that they are residents
business activities in California.
Withholding Request to the Franchise Tax
of California or have a permanent place of
• Distributions of California source taxable
Board (FTB) along with a signed copy of
business in California. Withholding agents
income to nonresident beneficiaries from
federal Form 8804‑C. The FTB will review the
should keep the signed form containing this
an estate or trust.
request within 21 business days. If the request
certification and provide it to the FTB upon
• Prizes and winnings received by
is approved, the partnership should remit the
request. Withholding agents are relieved
nonresidents for contests in California.
reduced withholding amount to the FTB along
of the withholding requirements if they
• Distributions of California source taxable
with Form 592‑A, Payment Voucher for Foreign
rely in good faith on a signed certification
income to a domestic (nonforeign)
Partner or Member Withholding.
(Form 590) that the payee is a resident
nonresident S corporation shareholder,
of California or has a permanent place of
partner, or member. For more information,
General Information
business in California. This exception does
get FTB Pub. 1017.
not apply, if the resident, S corporation,
• Allocations of California source income
A Purpose
partnership, or LLC that has a permanent
or gain to foreign (non‑U.S.) nonresident
Use Form 588, Nonresident Withholding
place of business in California is acting as
partners or members. For more
Waiver Request, to request a waiver on
an agent for the actual payee.
information, get FTB Pub. 1017. A foreign
withholding payments of California source
• The withholding agent’s total payments of
(non U.S.) partner or member may file a
income to nonresident payees.
California source income to the payee are
Form 589, to reduce or eliminate a partner’s
$1,500 or less for the calendar year.
withholding of California tax on ECTI from
Do not use Form 588 to request a waiver if you
• The payments are for income from
California sources, however a foreign (non
are a:
intangible personal property, such as
U.S) partner may not request a withholding
• Foreign (non-U.S.) partner or member. A
interest and dividends, unless derived in
waiver.
foreign (non U.S.) partner or member may
a trade or business or the property has
• Other California source income paid to
file a Form 589, to reduce or eliminate a
acquired a business situs in California.
nonresidents.
partner’s withholding of California tax on
• The payments are for services performed
• Endorsement payments received for
ECTI from California sources, however a
outside of California or for rents, royalties,
services performed in California.
foreign (non‑U.S.) partner or member may
and leases on property located outside of
Compensation for services includes payments
not request a withholding waiver.
California.
for personal services rendered in California,
• Seller of California real estate. Sellers
• The payment is to a nonresident corporate
commissions paid to salespersons or agents
of California real estate should use Form
director for director services, including
for orders received or sales made in California,
593‑C, Real Estate Withholding Certificate.
attendance at board meetings.
fees for professional services rendered in
Form 588 does not apply to payments of
• The payee is a tax‑exempt organization
California, and payments to entertainers,
backup withholding. For information on
under either California or federal law
wrestlers, boxers, etc., for performances in
California backup withholding, go to
(provide a completed Form 590 to the
California.
ftb.ca.gov and search for backup withholding.
withholding agent to certify).
When compensation is paid for services
• The payee is a government or any of its
Form 588 does not apply to payments for
performed both within and outside of
agencies or instrumentalities, a state or
wages to employees. Wage withholding is
California, the portion paid for services
any of its political subdivisions, a foreign
administered by the California Employment
rendered in California and subject to
government or any of its subdivisions,
Development Department (EDD). For more
withholding should be determined by an
agencies, or instrumentalities
information, go to edd.ca.gov or call
allocation. Refer to Form 587, Nonresident
• The payee receives a written authorization
888.745.3886.
Withholding Allocation Worksheet.
from the FTB waiving the withholding.
B Requirement
Use Form 592, Resident and Nonresident
• The domestic (nonforeign) nonresident
Withholding Statement, and/or Form 592‑F,
S corporation shareholder, partner, or
R&TC Section 18662 requires withholding of
Foreign Partner or Member Annual Return, to
member provides the S corporation,
income or franchise tax on certain payments
report withholding to the FTB. Use Form 592‑
partnership, or LLC with a properly
made to nonresidents for income received
V, Payment Voucher for Resident and
completed and signed Form 590‑P,
from California sources unless an approved
Nonresident Withholding, and/or Form 592‑A
Nonresident Withholding Exemption
reduction is issued. The withholding rate is
to remit withholding to the FTB. All withholding
Certificate for Previously Reported Income.
seven percent unless a waiver is granted by
payments must be submitted with a voucher.
• The income of nonresident S corporation
the FTB.
shareholders, partners, or members,
Nonresidents or foreign partners may use
including a bank or corporation, is derived
C Income Subject to
Form 589 to request a reduction in the
from qualified investment securities of an
statutory withholding amount that is applicable
Withholding
investment partnership.
to California source payments made to
The items of income subject to withholding
nonresidents or a foreign partner’s share of
include, but are not limited to:
ECTI from California sources.
Form 588 Instructions 2012 Page 1
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