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Withholding Agents Who Fail to Withhold

A withholding agent is required to withhold seven percent from all payments or distributions of California source income made to a nonresident payee unless the withholding agent receives authorization from us for a waiver or reduced withholding amount. 1

A withholding agent who fails to withhold, under withholds, or fails to remit withholding is 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. 2

Enforcement of withholding responsibilities

We actively pursue and assess liabilities on withholding agents that failed to comply with their withholding responsibilities. R&TC Section 18662(d) allows us to assess a liability for withholding when required, plus interest at the adjusted annual rate unless it is shown that the failure is due to reasonable cause. The liability is the maximum amount required to be withheld. R&TC Section 19183 allows us to assess a penalty for each information return not filed. The penalty is $100 for each payee.

Need more information about withholding?

Web:              Go to and search for nonresident withholding.
Phone:           888.792.4900 (Within the U.S.)
916.845.4900 (Outside the U.S.)
Fax:               916.845.9512
(This is not a secure email address. Please do not send confidential information.)

R&TC Section 18668

California Revenue and Taxation Code (R&TC) Section 18662

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