Updated withholding regulations and new forms December 2019 Tax News

Updates were made to the withholding regulations that may affect your tax preparation for any nonresident withholding and real estate.

Nonwage withholding regulation updates

To make it easier to comply with the requirements, real estate withholding stakeholders have provided consistent feedback on:

  • Various forms
  • Filing due dates

Changes were made to the California Code of Regulations, Title 18, Sections 18662-0 through 18662-6, and Section 18662-8, in an effort to:

  • Address their concerns
  • Simplify our process

These regulation changes required us to update, consolidate, and create new forms which impact the nonresident and real estate withholding communities.

Form 593, Real Estate Withholding Statement (Update and Consolidated)

We consolidated the following forms into one Real Estate Withholding Statement (Form 593):

  • Real Estate Withholding Tax Statement (Form 593)
  • Real Estate Withholding Certificate (Form 593-C)
  • Real Estate Withholding-Computation of Estimated Gain or Loss (Form 593-E)
  • Real Estate Withholding Installment Sales Acknowledgement (Form 593-I)

For real estate transactions that close beginning January 1, 2020, the remitter (real estate escrow person, qualified intermediary, buyer/transferee, or other) must complete, sign, and submit Form 593 to us whenever a sale of real property occurs. The form is due to both the seller and us by the 20th day of the following month in which the transaction closed. We now have one form, one due date, and consistency when filing the form. (Payment Voucher for Form (Form 593-V) must still be included with any payment sent to us.)

Two new forms for Pass-through Entity (PTE) Withholding

Regulation changes requires us to create the following two new forms specifically for PTE withholding:

  • Pass-Through Entity Annual Withholding Return (Form 592-PTE)
  • Payment Voucher for Pass-Through Entity Withholding (Form 592-Q)

For taxable years beginning January 1, 2020, use Form 592-PTE if for a pass-through entity that has either:

  • Paid withholding on behalf of a nonresident owner
  • Been withheld upon

This form will allow us to allocate the withholding payments to the payee upon receipt of the completed form. Form 592-PTE is due annually, however, payments are still due quarterly. Form 592-Q is the voucher included with any PTE withholding payment sent to us.
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