Real Estate Withholding Process Improvements Continue
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In our May article, Real Estate Withholding Process Improvements, we outlined many of the improvements made by the Withholding Services and Compliance Section to improve customer service and accuracy of real estate withholding. Since we continue to receive questions about real estate withholding, we want to again share this article and all we are doing to make the real estate withholding program a success in this year, and in the years to come:
Have you or your clients experienced real estate withholding problems? If so, we are here to help. We listened to your comments and share the desire to improve the process and availability of real estate withholding credits for our taxpayers. Our goal is to ensure that every real estate withholding credit is available for our taxpayers at the time they file their tax return. In October 2014, we conducted a study on our California Form 593, Real Estate Withholding Tax Statement, to determine the frequency of processing problems and to target specific areas for improvement. We found that we process 70 percent of the filed forms through our automated system successfully. However, 30 percent of the forms do not process successfully, primarily due to inaccurate information or incomplete forms. Since March 2015, we have been actively working on short-term processing improvements that match available real estate withholding credits to the correct taxpayers for this tax season. We are also working on long-term solutions that will improve the efficiency of the real estate withholding process for taxpayers. The following provides a brief overview of what is happening behind the scenes at FTB:
Our Short-Term Solutions
- Manually review the Forms 593 that do not process successfully through the automated system. We review each account, and work with the Real Estate Escrow Person (REEP) to make necessary corrections to a completed Form 593 and/or manually apply the credit before taxpayers file their tax return.
- Validate the accuracy of the Notice of Tax Change prior to mailing it to the taxpayer. This notice is generated when the credit claimed on the tax return does not match the credit available in our system. We review our records to determine if there is an unapplied credit or if the discrepancy is correct. In many cases, we found we are able to resolve the discrepancy prior to issuing the Notice of Tax Change.
Our Long-Term Solutions
- Educate the escrow community regarding Form 593 completion.
- Provide personal income tax real estate withholding credit information on MyFTB, so taxpayers can view their credits prior to filing their return. (Scheduled to launch in January 2016.)
- Revise FTB Publication 1016, Real Estate Withholding Guidelines, based on input from our stakeholders to clarify the real estate withholding process and instructions.
- Revise Form 593 based on input from taxpayers and practitioners. We want to make this form as user-friendly as possible and stay consistent with our real estate withholding regulations. Our goal is to gather the appropriate information so that we can accurately apply the credits in a timely manner.
If you or your clients experienced real estate withholding problems in the past, we are excited to share these future enhancements with you. If you notice an error in your client’s name and/or identification number on the FTB Form 593 or a difference between withholding on the escrow statement and the FTB Form 593, call us at 888.792.4900.
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