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Changes to 2010 Forms

Updates to the Form 587 on 11/04/2010 –– Nonresident Withholding Allocation Worksheet

We replaced text on the Form 587 Instructions on Page 1, in Column 1, General Information, 2nd paragraph, Backup Withholding.

Previous Version

For taxable years beginning on or after January 1, 2010, with certain limited exceptions, payers that are required to withhold and remit backup withholding to the Internal Revenue Service (IRS) are also required to withhold and remit to the Franchise Tax Board (FTB). The California backup withholding rate is 7% of the payment. For California purposes, dividends, interests, and any financial institutions release of loan funds made in the normal course of business are exempt from backup withholding. For additional information on California backup withholding, go to ftb.ca.gov and search for backup withholding.

Revised Version

Beginning on or after January 1, 2010, with certain limited exceptions, payers that are required to withhold and remit backup withholding to the Internal Revenue Service (IRS) are also required to withhold and remit to the Franchise Tax Board (FTB). The California backup withholding rate is 7% of the payment. For California purposes, dividends, interests, and any financial institutions release of loan funds made in the normal course of business are exempt from backup withholding. For additional information on California backup withholding, go to ftb.ca.gov and search for backup withholding.

Reason for the changes

ABX 4 18 was chaptered on 07-28-09 and added R&TC Section 18664 regarding backup withholding. This revision will accommodate fiscal filers and will make the backup withholding paragraph in agreement with the language in ABX 4 18.

Impact

There is no tax impact.

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