Form 3864 - California Group Nonresident Return Election

h. Credits.

• Shareholders/partners/members are not allowed credits except those directly attributable to the business entity’s

activity . In the event the allowable credits exceed the amount of tax for a given year and credits are available for

carryover, the business entity will properly account for such credit with respect to each individual included in the

group nonresident return .

• Directors are not allowed any credits.

See FTB Pub . 1067 for more information .

i. Tax Assessed at the Highest Marginal Rate. Each individual included in the group nonresident return will be

assessed tax on his or her California source income at the highest marginal rate of 12 .3% .

j. Mental Health Tax. Nonresident individuals with more than $1 million of California taxable income can be included

in the group return . However, these individuals are subject to an additional 1% tax on their entire California taxable

income when included in the group return . This differs from when individuals file their own return and only the taxable

income in excess of $1 million is subject to the additional 1% tax . Individuals should be aware of this difference when

making their irrevocable election to be included in the group return .

For individuals included in two or more group returns, the additional 1% tax applies if their combined California taxable

income from all their group returns is more than $1 million . For example, an individual is included in two group returns .

The individual’s taxable income on each group return is less than $1 million . However, the combined taxable income

from the two group returns is over $1 million . The individual’s income reported on each group return is subject to the

additional 1% tax . The business entity/corporation is responsible for finding out from each individual included in the

group return if the individual has total California taxable income in excess of $1 million . If so, it is the business entity/

corporations’ responsibility to report and pay the tax additional 1% tax on the group return .

k. Estimated Tax. The business entity/corporation shall make estimated tax payments for the group pursuant to

R&TC Section 19136 . Payment for the group will be made under the FEIN of the business entity or corporation as

instructed in FTB Pub . 1067 .

l. Tax Assessments, Protest, Claims, Appeals, and Court Procedures. The business entity/corporation shall receive

any notices of proposed tax to be assessed and any assessments of tax with respect to the group nonresident

return . Additionally, the business entity/corporation, or its designated representative, shall represent the individuals

in protest, claims for refund, appeal procedures, or in court proceeding related to tax matters associated with the

group nonresident filing . The business entity/corporation shall pay any tax assessments and any attributable interest

and penalties for the group nonresident return . The penalties will be computed as if all the electing individuals

included in the return did not participate in any other group nonresident return for that same tax year . The business

entity’s/corporation’s agreement to pay tax, interest and penalties does not absolve the individuals of their respective

obligations to pay their California taxes, interest, and penalties, if such obligations are not satisfied by the business

entity/corporation .

m. Agree to Act as Withholding Agent. If an electing nonresident individual has a tax deficiency attributable to California

source income that was distributable by the business entity or paid by the corporation to the individual for any tax year,

the business entity/corporation agrees that it shall act as a withholding agent . The business entity agrees to accept

(without contesting jurisdiction) Orders to Withhold against funds to be distributed to such individuals . The funds need

not be paid over to the Franchise Tax Board until they are clearly identified as being currently distributable .

n. Business Entity to File Appropriate California Return. The business entity shall file Form 100S, California

S Corporation Franchise or Income Tax Return/Form 565, California Partnership Return of Income/Form 568,

Limited Liability Company Return of Income, as appropriate . A business entity doing business within and outside

of California must determine the portion of the total net income that has its source in California using the allocation

and apportionment provisions in the Uniform Division of Income for Tax Purposes Act (UDITPA) . Refer to R&TC

Sections 25120 through 25141 and applicable regulations .

o. Corporation to File Appropriate California Return. The corporation shall file Form 100, California Franchise or

Income Tax Return, or Form 100S .

The terms and conditions set forth above are agreed to on behalf of the above-named business entity/corporation and its electing nonresident

individuals . I have been authorized by the above-named business entity/corporation and its electing individuals to accept the terms and conditions set

forth above .

Authorized signature (As specified in item a .)

Title

Date

Telephone



(

)

Print name

Business entity’s name

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Side 2 FTB 3864

2015

7612153

Form 3864 - California Group Nonresident Return Election - 2015 Page 2

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