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Changes to 2009 Forms

Updates to the Form 593-V on 05/18/2009 –– Payment Voucher for Real Estate Withholding Electronic Submission

We replaced text on the Form 593-V Instructions, on the What’s New paragraph, Withholding Rates

Previous Version

Withholding Rates – For taxable years beginning on or after January 1, 2009, Non-California Partnerships will be subject to withholding requirements on a sale of California real property at a rate of 3 1/3% of sales proceeds or 9.3% of gain. The alternative withholding rates for the sale of California real property by S corporations will be increased to 10.8% and 12.8% for Financial S corporations.

Revised Version

Increase in Rates – For taxable years beginning on or after January 1, 2009, the maximum personal income tax rate is increased to 9.55%. In addition, non-California Partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% of sales proceeds or 9.55% of gain. The alternative withholding rates for the sale of California real property by S corporations is increased to 11.05% and 13.05% for Financial S corporations.

Reason for the changes

Based on AB X3 3, California income tax rates will increase by .25%, for tax years beginning on or after January 1, 2009. The real estate withholding forms were already finalized for 2009, before this legislation was introduced and signed, and therefore the 2009 forms need to be revised to reflect the change of the increase in rates.

Tax Impact

Taxpayers may be under withheld which may increase tax liability; however, taxpayers that are under withheld will not be assessed an underpayment of estimated tax or underpayment of tax penalty to the extent that underpayment was created or increased by the change in the tax rate.

Back to Tax Form Changes for 2009