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State of California Franchise Tax Board

Term Definitions for Resident and Nonresident Withholding

Composite statement – Composite statement means one in which two or more required Internal Revenue Service statements (for example: Forms 1099-B and 1099-DIV) are furnished to the recipient on one document.

Entertainment industry independent contractors can be individuals, corporations, limited liability companies (LLCs), or partnerships. They include, but are not limited to:

  • Actors
  • Bands
  • Boxers
  • Dance teams
  • Orchestras
  • Plays
  • Singers
  • Speakers
  • Sports entertainers
  • Wrestlers
  • Stage help
  • Lighting crews
  • Promoters
  • Talent agents

Entertainment industry withholding agents must withhold at the 7 percent rate when appropriate. See independent contractor below.

Financial institution – A depository institution (i.e., any bank or savings association), an institution-affiliated party (i.e., any director, officer, employee, or controlling shareholder), or a federal or state credit union.

Independent contractor – An independent contractor is an individual or entity that contracts to perform services. Employees are not independent contractors.

Nonwage compensation examples include, but are not limited to:

  • Real estate transactions
  • Interest and dividends
  • Rents and royalties
  • Prizes and winnings
  • Premiums and annuities
  • Compensation for personal services
  • Other fixed or determinable annual or periodic gains, profits, and income

Payee – For purposes of our withholding tax forms, we use the term “payee” to describe any person or entity that receives payment from a payer (see more at "Withholding agent" below). We may also refer to the payee as the “vendor.” Payees may be residents or nonresidents of California.

Payer – A payer is an individual, a business, or a government entity that makes payments to a payee. Payers are also known as withholding agents.

Withholding agent – A withholding agent is any person or entity having the control, receipt, custody, disposal, or payment of California source income. We also refer to withholding agents as “payers.”

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