Chat with an FTB Representative

Changes to 2011 Forms

Updates to the Form 589 on 08/17/2011 –– Nonresident Reduced Withholding Request

We added and/or revised text on the Form 589 on:

  1. Form Side 1, Part IV, Withholding Amount section, Line 1
  2. Form Side 1, Part IV, Withholding Amount section, Other Expenses
  3. Instructions Page 1, Column 1, What’s New section
  4. Instructions Page 1, Column 2, Purpose section, Paragraph 1
  5. Instructions Page 1, Column 2, When and Where to File section, Paragraph 1, Sentence 2
  6. Instructions Page 1, Column 2, When and Where to File section, Paragraph 1
  7. Instructions Page 2, Column 1, Part IV, Withholding Amount section, Line 1
  8. Instructions Page 2, Column 2, Part IV, Withholding Amount section, Line 10 and Line 11

Previous Version

  1. Note: new text added
  2. Note: new text added
  3. Note: new text added
  4. A domestic nonresident taxpayer that can show that the required seven percent rate of withholding will result in excessive withholding, should use Form 589, to apply for a reduction in the amount to be withheld (see Revenue and Taxation Code (R&TC) Section 18662).
  5. The payee must submit Form 589 to the FTB before receiving payment for services. Form 589 is a request for a reduced withholding amount and does not guarantee the domestic nonresident payee a reduction in withholding unless approved by the FTB prior to the payment for services being performed.
  6. Note: new text added
  7. Note: new text added
  8. Note: new text added

Revised Version

  1. Gross California Source Payment. See instructions.
  2. Other Expenses (specify). See instructions.
  3. Online Filing - Beginning on August 29, 2011, Form 589 may be filed online. For more information, go to ftb.ca.gov and search for withholding.
  4. A nonresident taxpayer that can show that the required seven percent rate of withholding will result in excessive withholding, should use Form 589, to apply for a reduction in the amount to be withheld (see Revenue and Taxation Code (R&TC) Section 18662).
  5. The payee must submit Form 589 to the FTB before receiving payment for services. Form 589 is a request for a reduced withholding amount and does not guarantee the nonresident payee a reduction in withholding unless approved by the FTB prior to the payment for services being performed.
  6. Online Filing:

    Beginning August 29, 2011 you may file Form 589, online. After this date we will not be able to process faxed Forms 589. If you file Form 589 online and you need to submit additional documentation, (i.e. federal Form 8804-C, federal Schedule E (Form 1040), expense breakdown, etc.), you must fax the documentation to us at 916.845.9512. On the fax containing your documentation, you must include your name, TIN, and the confirmation number of your online Form 589 submission.

    Allow 10 business days for processing online filing.

    By Mail:

    Allow 21 business days for processing. Submit requests by mail to:

  7. Line 1 – Enter the total gross California source payment the payee expects to receive for performing services. If the payee and withholding agent have entered into a contract for services, this amount should match the gross payment. A foreign partner enters the gross payments of ECTI from California sources.
  8. Line 10 and Line 11 – Other Expenses (specify)

    Enter other direct expenses, costs, or special circumstances that justify reduced withholding, including all ordinary and necessary business expenses not deducted elsewhere on Form 589. List the type and amount of each expense separately in the space provided.

    A foreign partner must attach a completed and signed federal Form 8804-C to the Form 589. Enter the total of California amounts from federal Form 8804-C, lines 8a through 8f, to Form 589, line 10.

Reason for the changes

To inform users of an FTB administrative filing procedure change of Form 589.

Impact

There is no tax impact.

Back to Tax Form Changes for 2011


Updates to the Form 589 on 07/25/2011 –– Nonresident Reduced Withholding Request

We added and/or revised text on the Form 589 Instructions on Page 1, Column 1, in these sections:

  1. What’s New
  2. A Purpose

Previous Version

  1. Note: new text added
  2. Do not use Form 589 to request a reduced withholding amount if you are one of the following:
    • Foreign (non-U.S.) partner or member. There are no provisions in the California R&TC to waive or reduce withholding for foreign partners or members.
    • Seller of California real estate. Sellers should use Form 593-C, Real Estate Withholding Certificate.

Revised Version

  1. Beginning January 1, 2011, we began applying Federal Treasury Regulation 1.1446-6 procedures to reduce or eliminate withholding of California tax on effectively connected taxable income (ECTI) from California sources allocable to a foreign partner. The foreign partner must first sign and send IRS Form 8804-C to the partnership. The foreign partner must sign and send Form 589, Nonresident Reduced Withholding Request to the Franchise Tax Board (FTB) along with a signed copy of IRS Form 8804-C. The FTB will review the request within 21 business days. If the request is approved, the partnership should remit the reduced withholding amount to the FTB along with Form 592-A, Payment Voucher for Foreign Partner or Member Withholding.
  2. Do not use Form 589 to request a reduced withholding amount if you are a seller of California real estate. Sellers should use Form 593-C, Real Estate Withholding Certificate.

A foreign (non-U.S.) partner or member may file Form 589, to reduce or eliminate a partners withholding of California tax on ECTI from California sources, however a foreign (non-U.S.) partner or member may not request a withholding waiver.

Reason for the changes

The reason for the change is an FTB administrative procedural update to apply corresponding federal procedures.

Impact

There is no tax impact.

Back to Tax Form Changes for 2011