Foreign Partner Reduced Withholding

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Purpose of bulletin

To inform staff that effective January 1, 2011, foreign non-U.S. partners can request reduced or no withholding of California tax.


Beginning January 1, 2011, we began applying Federal Treasury Regulation 1.1446-6 procedures that allows foreign partners to request reduced or no withholding of California tax on income from California sources allocable to a foreign partner. The foreign partner certifies to the partnership and to us, no or reduced California tax will be due.

Foreign partners can request reduced withholding annually by submitting the following forms:

  • Form 589, Nonresident Reduced Withholding Request
  • IRS Form 8804-C, Certificate of Partner-Level Items to Reduce Section 1446 Withholding

Request and report foreign partner reduced withholding as follows:

  • The foreign partner submits a completed and signed IRS Form 8804-C to the partnership.
  • The foreign partner submits Form 589, Nonresident Reduced Withholding Request with a signed copy of IRS Form 8804-C attached; allow 21 business days before the first installment period.
  • If we approve the reduction, we send the foreign partner and the partnership a Request for Reduced Withholding – Approval letter, and the partnership withholds the amount approved by us. If we deny the reduction, we notify the foreign partner of the amount of withholding required.
  • The partnership sends us the withheld amounts using Form 592-A, Payment Voucher for Foreign Partner or Member Withholding.
  • At the end of the tax year, the partnership completes and sends us Form 592-F, Foreign Partner or Member Annual Return.
  • The foreign partner claims the withholding by attaching a copy of Form 592-B, Resident and Nonresident Withholding Tax Statement when filing a California income tax return.

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