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NONRESIDENT WITHHOLDING INCENTIVE PROGRAM

FTB Archive Disclaimer:  Archived content is not current and may contain broken links. It remains online for historical reference or research. The search function above allows you to search archived and current content separately. If you need archived content in a different format, contact us.

PURPOSE OF BULLETIN

To advise staff that beginning December 15, 2008, we are offering the 2008 Nonresident Withholding Incentive Program (NWIP) to withholding agents who are first time filers and remitters of nonresident nonwage withholding. Program participants must remit past due 2008 withholding as additional compensation on behalf of the nonresident payee and pay interest by March 16, 2009.

BACKGROUND

We made significant compliance program changes in 2008. New withholding requirements are also effective beginning January 1, 2009. In order to provide a greater degree of awareness and to enhance compliance, we offer this year-end voluntary program.

If all program documents are completed and past due withholding amounts are paid, including interest, we agree to waive the following 2008 penalties based on reasonable cause: a) failure to file correct information returns for Form 592; and b) failure to file correct information returns for Form 592-B. While we may review or audit for 2008 NWIP compliance, we agree not to audit nonresident withholding for the 2007 tax year and earlier.

Withholding agents may deduct the amount remitted on their tax returns. Nonresident payees should include the additional compensation as income and may claim the California withholding on their 2008 tax return.

Note: This program does not include real estate withholding.

WHAT SHOULD THE WITHHOLDING AGENT DO?

Eligible withholding agents should submit the following to us by March 16, 2009:

  • A completed FTB 1033, 2008 Nonresident Withholding Incentive Program Application
  • A completed 2008 Form 592 for each quarter (an online calculator is provided on our website ftb.ca.gov
  • The required withholding amount plus interest

Also provide:

  • The IRS and each payee with a completed 2008 IRS Form 1099 MISC, which includes the gross up compensation
  • Each payee with a completed 2008 Form 592B, Nonresident Withholding Tax Statement
  • Explanation of additional compensation

WHERE TO FILE

To ensure proper handling, annotate “NWIP” at the top of each Form 592 and submit the Forms 592 and 1033 with the remittance to the following address:

Withholding Services and Compliance
Franchise Tax Board
PO Box 942867
Sacramento CA 94267-8888

TAXPAYER INQUIRIES

Taxpayers can visit our website ftb.ca.gov, beginning December 15, 2008 and search for “nonresident withholding.” They may also call us at 888.792.4900 (toll free), or 916.845.4900 (not toll free) Monday through Friday, 8:00am – 5:00pm.

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