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Changes to 2010 Forms

Updates to the Form 590 on 03/10/2010—Withholding Exemption Certificate

We replaced text on the Form 590, on:

  1. Form Side 1: Corporations paragraph;
  2. Form Side 1: Partnerships paragraph;
  3. Form Side 1: Limited Liability Companies (LLC) paragraph
  4. Form Side 1: below Estates paragraph
  5. Instructions Page 1: What's New paragraph
  6. Instructions Page 1: Section B, last paragraph, last sentence
  7. Instructions Page 1: Section D, Who is a Resident - below last paragraph
  8. Instructions Page 1: Section E, What is a Permanent Place of Business - heading
  9. Instructions Page 1: Section F, Withholding Agent - heading, and second paragraph
  10. Instructions Page 1: Section G, Publications, Forms, and Additional Information - heading

Previous Version

  1. Corporations:
    The above-named corporation has a permanent place of business in California at the address shown above or is qualified through the California Secretary of State (SOS) to do business in California. The corporation will file a California tax return and withhold on payments of California source income to nonresidents when required. If this corporation ceases to have a permanent place of business in California or ceases to do any of the above, I will promptly notify the withholding agent. See instructions for General Information E, What is a Permanent Place of Business, for the definition of permanent place of business
  2. .

  3. Partnerships:
    The above-named partnership has a permanent place of business in California at the address shown above or is registered with the California SOS, and is subject to the laws of California. The partnership will file a California tax return and will withhold on foreign and domestic nonresident partners when required. If the partnership ceases to do any of the above, I will promptly inform the withholding agent. For withholding purposes, a Limited Liability Partnership (LLP) is treated like any other partnership.


  4. Limited Liability Companies (LLC):
    The above-named LLC has a permanent place of business in California at the address shown above or is registered with the California SOS, and is subject to the laws of California. The LLC will file a California tax return and will withhold on foreign and domestic nonresident members when required. If the LLC ceases to do any of the above, I will promptly notify the withholding agent.


  5. Estates - Certification of Residency of Deceased Person:
    I am the executor of the above-named person's estate. The decedent was a California resident at the time of death. The estate will file a California fiduciary tax return and will withhold on foreign and domestic nonresident beneficiaries when required.


  6. What's New
    Backup Withholding - 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.


  7. For more information on withholding and waiver requests, get FTB Pub. 1017, Resident and Nonresident Withholding Guidelines. To get a withholding publication, see General Information G, Publications, Forms, and Additional Information.


  8. For assistance in determining resident status, get FTB Pub. 1031, Guidelines for Determining Resident Status, and FTB Pub. 1032, Tax Information for Military Personnel, or call the FTB at 800.852.5711 or 916.845.6500.


  9. E What is a Permanent Place of Business


  10. F Withholding Agent


  11. G Publications, Forms, and Additional Information

Revised Version

  1. Corporations:
    The above-named corporation has a permanent place of business in California at the address shown above or is qualified through the California Secretary of State (SOS) to do business in California. The corporation will file a California tax return and withhold on payments of California source income to nonresidents when required. If this corporation ceases to have a permanent place of business in California or ceases to do any of the above, I will promptly notify the withholding agent. See instructions for General Information F, What is a Permanent Place of Business, for the definition of permanent place of business.


  2. Partnerships or Limited Liability Companies (LLC):
    The above-named partnership or LLC has a permanent place of business in California at the address shown above or is registered with the California SOS, and is subject to the laws of California. The partnership or LLC will file a California tax return and will withhold on foreign and domestic nonresident partners or members when required. If the partnership or LLC ceases to do any of the above, I will promptly inform the withholding agent. For withholding purposes, a Limited Liability Partnership (LLP) is treated like any other partnership.


  3. Note: All text deleted and merged into number 2 changes listed above.


  4. Estates - Certification of Residency of Deceased Person:
    I am the executor of the above-named person's estate. The decedent was a California resident at the time of death. The estate will file a California fiduciary tax return and will withhold on foreign and domestic nonresident beneficiaries when required.

    Nonmilitary Spouse of a Military Servicemember:
    I am a nonmilitary spouse of a military servicemember and I meet the Military Spouse Residency Relief Act (MSRRA) requirements. See instructions for General Information E, MSRRA.


  5. What's New
    Backup Withholding - 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.

    Military Spouse Residency Relief Act (MSRRA) - The MSRRA amended the federal Servicemembers Civil Relief Act. For taxable years beginning on or after January 1, 2009, a nonmilitary spouse of a military servicemember shall neither lose nor acquire a residence or domicile for purposes of taxation by reason of being absent from or present in California to be with the servicemember serving in compliance with the servicemember's military orders if the servicemember and spouse have the same domicile. Income of a military servicemember's nonmilitary spouse for services performed in California is not California source income subject to state tax if the spouse is in California to be with the servicemember serving in compliance with military orders, and the servicemember and spouse have the same domicile in a state other than California. For additional information, get FTB Pub. 1032, Tax Information for Military Personnel.


  6. For more information on withholding and waiver requests, get FTB Pub. 1017, Resident and Nonresident Withholding Guidelines. To get a withholding publication, see General Information H, Publications, Forms, and Additional Information.


  7. For assistance in determining resident status, get FTB Pub. 1031, Guidelines for Determining Resident Status, and FTB Pub. 1032, Tax Information for Military Personnel, or call the FTB at 800.852.5711 or 916.845.6500.

    E Military Spouse Residency Relief Act (MSRRA) Generally, for tax purposes you are considered to maintain your existing residence or domicile. However, under newly enacted MSRRA, if a military servicemember and nonmilitary spouse have the same state of domicile, the MSRRA provides:
    • A spouse shall not be deemed to have lost a residence or domicile in any state solely by reason of being absent to be with the servicemember serving in compliance with military orders
    • A spouse shall not be deemed to have acquired a residence or domicile in any other state solely by reason of being there to be with the servicemember serving in compliance with military orders
    Domicile is defined as the one place:
    • Where you maintain a true, fixed and permanent home
    • To which you intend to return whenever you are absent
    A military servicemember's nonmilitary spouse is considered a nonresident for tax purposes if the servicemember and spouse have the same domicile outside of California and the spouse is in California solely to be with the servicemember who is serving in compliance with Permanent Change of Station orders (Note: California may require nonmilitary spouses of military servicemembers to provide proof that they meet the criteria for California personal income tax exemption as set forth in the MSRRA ).

    For assistance in determining whether the applicant meets the MSRRA requirements, get FTB Pub. 1032, Tax Information for Military Personnel.


  8. F What is a Permanent Place of Business


  9. G Withholding Agent


  10. H Publications, Forms, and Additional Information

Reason for the changes

The following changes are being made to the form to incorporate information and instructions regarding the Military Spouse Residency Relief Act (MSRRA).
  1. To correct the reference to the General Information section within the Instructions. When new information was added to the instructions, the reference letters for General Information paragraphs changed.


  2. To combine the Limited Liability Company paragraph with the Partnership paragraph.


  3. Since the LLC paragraph was combined with the Partnership paragraph, the LLC paragraph is no longer needed.


  4. To add a checkbox for Nonmilitary Spouse of a Military Servicemember information.


  5. To add the Military Spouse Residency Relief Act (MSRRA) what's new paragraph.


  6. To correct the reference to the General Information section within the Instructions. When new information was added to the instructions, the reference letters for General Information paragraphs changed.


  7. To add new section of instructions for the Military Spouse Residency Relief Act.


  8. To update the reference letter for this section. When the new section of instructions for the military spouse residency relief act was added, it shifted the reference letters to the remaining sections in the instructions.


  9. To update the reference letter for this section. When the new section of instructions for the military spouse residency relief act was added, it shifted the reference letters to the remaining sections in the instructions.


  10. To update the reference letter for this section. When the new section of instructions for the military spouse residency relief act was added, it shifted the reference letters to the remaining sections in the instructions.

Impact

Adding the Military Spouse Residency Relief Act will certify exemption for a nonmilitary spouse from nonresident withholding, potentially lower tax liability.

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