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Tax NNew nonresident withholding incentive program for withholding agentsews  New nonresident withholding incentive program for withholding agents

In the November 2007 and August 2008 issues of Tax News, we publicized our ongoing audits to increase withholding compliance. Soon we will offer a voluntary incentive program where withholding agents, who have not previously withheld, may remit past-due non-wage withholding for tax year 2008 until March 15, 2009. Non-wage compensation includes:

  • Interest and dividends.
  • Rent and royalties.
  • Prizes and winnings.
  • Premiums and annuities.
  • Compensation for personal services.
  • Other fixed or determinable annual or periodical gains, profits, and income.

As an incentive, we will apply reasonable cause to waive the penalties for the following:

  • Failure to file correct information returns, Form 592.
  • Failure to file correct information returns, Form 592-B.

We made significant changes in 2008, particularly with regard to our nonresident, quarterly withholding program, and our audit and compliance program. New withholding requirements are also effective January 1, 2009, with the enactment of Assembly Bill 3078.  In order to provide a greater degree of awareness and to enhance compliance for new withholding agents, we plan to offer this year-end 2008 voluntary incentive program, where we will waive certain penalties that have reasonable cause provisions.  Beginning in 2009, we will solicit information from all sources to increase compliance in future years.

Check our website after December 15, 2008, for news, forms, and detailed instructions on our new voluntary withholding incentive program. You may access our news by searching for withholding incentive on our nonresident withholding webpage.

 We will publish news and tools that will assist withholding agents in filing the proper forms.

If you have questions, you may contact us by email at wscs.gen@ftb.ca.gov. Type “NWIP” in the subject line. This is not a secured email address. Please do not send confidential information.