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Failure to Withhold Makes You Liable

Beware that if you pay California source income to nonresidents of California, you must withhold and send us seven percent of all payments that exceed $1,500 in a calendar year.

If a withholding agent fails to withhold, underwithholds, or fails to send withholding, the agent becomes liable for the greater of:

  • The amount actually withheld.
  • The amount of taxes due from the nonresident, but not more than the amount required to be withheld.

Proactive Education and Outreach Effort

Over the last two years, we focused on informing and educating California withholding agents and industries on nonresident withholding requirements to gain voluntary compliance. We:

  • Improved our publications, forms, and webpages.
  • Published articles in Tax News and other industry publications.
  • Marketed and conducted nonresident withholding workshops.
  • Proactively contacted industries, associations, businesses, and individuals and shared nonresident withhold information.
  • Provided telephone customer service through our public service teams.
  • Shared withholding information at industry-specific events, including seminars, conferences, association meetings, and webinars.
  • Offered the Nonresident Withholding Incentive Program (NWIP) to withholding agents who were first-time filers and remitters of nonresident nonwage withholding.

Next Steps-Enforcement of Withhold Responsibilities

This month, we begin actively pursuing withhold agents that failed to comply with their withholding responsibilities being liable for 100 percent of the amount that should have been withheld and sent to us.

Need more information about withholding?

Phone:

Within the U.S., call: 888.792.4900 Outside the U.S., call: 916.845.4900 (not toll-free) Fax: 916.845.9512

Web:

Go to ftb.ca.gov and search for nonresident withholding.

Email:

wscs.gen@ftb.ca.gov
(This is not a secure email address. Please do not send confidential information.)


Back to July 2009 Tax News