California Form 593-I - Real Estate Withholding Installment Sale Acknowledgement - 2014 Page 2
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1
2
3Instructions for Form 593-I
Real Estate Withholding Installment Sale Acknowledgement
General Information
rate of 3
/
% (.0333) of the total sales price
on the principal portion of all subsequent
1
3
or the Optional Gain on Sale withholding
payments (including payoff or balloon
When California real estate is sold on an
percentage, as specified by the seller or
payments).
installment basis, the buyer is required to
transferor on Form 593. The buyer provides
After completing the form, the buyer should
withhold on the principal portion of each
acknowledgement by signing Part IV.
copy all pages to have the instructions for
installment payment, an amount based on
The withholding agent retains this form for a
withholding on subsequent payments. The
either 3
/
% (.0333) of the total sales price, or
1
3
I
minimum of five years and must provide it to
buyer will give the original Form 593-
, a
the Optional Gain on Sale withholding amount
the FTB upon request.
copy of the promissory note, the seller’s
from Form 593, Real Estate Withholding
or transferor’s certified Form 593, and
Tax Statement, line 5, which is certified
B Interest and Penalties
Form 593-V, Payment Voucher for Real Estate
by the seller or transferor. If an exemption
Withholding, to the REEP and have them mail
applies, no withholding is required. There is
Interest will be assessed on late withholding
the documents to the FTB with the withholding
no withholding on the interest portion of the
payments and is computed from the due date
on the principal portion of the first installment
installment payment.
to the date paid. If the REEP does not notify
payment to:
the buyer of the withholding requirements in
Real Estate Escrow Person (REEP) – REEP
writing, the penalty is the greater of $500 or
FRANCHISE TAX BOARD
is any person involved in closing the real
10% of the required withholding.
PO BOX 942867
estate transaction which includes any attorney,
SACRAMENTO CA 94267-0651
escrow company, or title company, or any
If after notification, the buyer or other
other person who receives and disburses
withholding agent does not withhold, the
When making subsequent installment
payment for the sale of real property.
penalty is the greater of $500 or 10% of the
payments, withhold either 3
/
% (.0333) of
1
3
required withholding.
the total sales price, or the Optional Gain on
Installment Sales – The withholding agent
Sale withholding percentage, as specified by
is required to report an installment sale if the
If the buyer or other withholding agent does
the seller or transferor on Form 593, on the
transaction is structured as an installment
not furnish complete and correct copies of
principal portion of each installment payment.
sale as evidenced by a promissory note. The
Form 593 to the seller or transferor by the due
The seller’s or transferor’s signature is not
withholding agent is required to withhold
date, the penalty is $50 per Form 593. If the
required on each subsequent and completed
3
/
% (.0333) of the first installment payment.
failure is due to an intentional disregard of the
1
3
Form 593. Do not include another completed
requirement, the penalty is the greater of $100
Buyers are required to withhold on the
Form 593-
I
and a copy of the promissory
or 10% of the required withholding.
principal portion of each subsequent
note. Mail withholding payments with Form
We assess a penalty for failure to file complete,
installment payment if the sale of California real
593-V, and a completed Form 593 for each
property is structured as an installment sale.
correct, and timely information returns. The
withholding payment.
penalty is calculated per seller:
Withhold on Installment Sale Elect-out
When the buyer sends the withholding on
Method – If the seller or transferor elects not
• $15 if filed 1 to 30 days after the due date.
the final installment payment, write “Final
to report the sale on the installment method
• $30 if filed 31 days to 6 months after the
Installment Payment” on the bottom of
(Internal Revenue Code Section 453[d]),
due date.
Form 593.
the seller or transferor must file a California
• $50 if filed more than 6 months after the
For more information on withholding on
tax return and report the entire sale on
due date.
installment payments, get the instructions for
Schedule D-1, Sale of Business Property. After
(R&TC Section 19183)
Form 593 or call Withholding Services and
filing the tax return and reporting the entire
If the failure is due to an intentional disregard
Compliance at 888.792.4900 or 916.845.4900.
gain, the seller or transferor must submit a
of the requirement, the penalty is the greater of
written request to the Franchise Tax Board (FTB)
Part I – Buyer
$100 or 10% of the required withholding.
to release the buyer from withholding on the
Specific Instructions
installment sale payments. Once the request
Enter the buyer’s name as it is shown on the
is received, the FTB will issue an approval or
escrow instructions. Each buyer is required
Private Mail Box (PMB) – Include the PMB
denial within 30 days.
to withhold on individual payments and must
in the address field. Write “PMB” first, then
complete a separate Form 593-
I
. However, if
Registered Domestic Partners (RDP) – For
the box number. Example: 111 Main Street
the buyers are spouses/RDPs and both of them
purposes of California income tax, references
PMB 123.
will be on the promissory note, then include
to a spouse, husband, or wife also refer to a
Foreign Address – Enter the information in the
both names, social security numbers (SSNs)
California RDP, unless otherwise specified.
following order: City, Country, Province/Region,
or individual taxpayer identification numbers
When we use the initials RDP they refer to both
and Postal Code. Follow the country’s practice
(ITINs), and signatures on one form. If the
a California registered domestic “partner” and
for entering the postal code. Do not abbreviate
buyer is a business, enter the business name
a California registered domestic “partnership,”
the country’s name.
in the business name field.
as applicable. For more information on
RDPs, get FTB Pub. 737, Tax Information for
The buyer’s identification number (SSN, ITIN,
Buyer Instructions
Registered Domestic Partners.
federal employer identification number (FEIN),
I
Form 593-
, Parts I, II, III, and IV should only
CA corporation (CA Corp no.), or CA Secretary
A Purpose
be completed by the buyer. Forms are updated
of State (CA SOS) file number is required on
annually. Make certain that the most current
each form to be valid.
Use Form 593-
I
, Real Estate Withholding
version of the form is being used.
Installment Sale Acknowledgement, to
Part II – Seller or Transferor
The buyer must withhold on the principal
acknowledge the buyer’s requirement to
portion of each installment payment. However,
withhold on the principal portion of each
Enter the seller’s or transferor’s name as it
the buyer may authorize the REEP to withhold
installment payment to the seller or transferor
is shown on the escrow instructions. Use
on the principal portion of the first installment
for the sale of California real property. The
a separate Form 593-
I
for each seller or
payment. In this case the buyer withholds
buyer is required to withhold at either the
transferor included on the promissory note.
Form 593-
I
Instructions 2013 Page 1
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