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New: Reduced Withholding for Foreign Partners

Effective January 1, 2011, we began applying Federal Treasury Regulation 1.1446-6 procedures, which allow foreign partners to request reduced or no withholding of California tax on effectively connected taxable income from California sources allocable to a foreign partner. The foreign partner certifies to the partnership, and to us, that no or reduced California tax will be due. If we approve the request, we notify the foreign partner and the partnership. The term “partner” in this article, includes Limited Liability Company (LLC) members of an LLC taxed as a partnership for federal purposes.

Foreign partners can request reduced withholding from us annually before the first installment period using FTB Form 589, Nonresident Reduced Withholding Request. See FTB Form 589 instructions for details.

A foreign partner must submit a completed and signed IRS Form 8804-C, Certificate of Partner-Level Items to Reduce Section 1446 Withholding, with FTB Form 589. On line 10 of the Form 589, enter the total of California amounts from 8a through 8f of Form 8804-C.

The chart below summarizes how to request and report foreign partner reduced withholding.

If you are a partnership who allocates California source income to a foreign partner…



All of the following are true:

  • The foreign partner submits to the partnership a completed and signed IRS Form 8804-C.

  • The foreign partner submits to us FTB Form 589 with a signed copy of IRS Form 8804-C attached, allowing us at least 21 business days before the first installment period.

  • We send the foreign partner and the partnership a Request for Reduced Withholding - Approved letter.


The partnership:

  • Withholds the amount approved by us.

  • Sends us the withheld amounts using FTB Form 592-A, Payment Voucher for Foreign Partner or Member Withholding. See Form 592-A for payment due dates.

  • At the close of the taxable year, completes and sends to us FTB Form 592-F, Foreign Partner or Member Annual Return. Form 592-F allows reporting of total withholding for the year and allocates to foreign partners the income or gain and related withholding.

  • Provides the foreign partner with a statement showing the total income allocated and the total amount withheld. The partnership can use a printed or electronic FTB Form 592-B, Resident and Nonresident Withholding Tax Statement, for this purpose. See FTB Form 592-B instructions for due dates and details.

  • Keeps the approved letter, and FTB Forms 592-A, 592-F, and 592-B for a minimum of four years.

  • In general, we conform to IRC 1446 and the 10-day notification of withholding for foreign payees.

The foreign partner claims credit for the withholding by attaching a copy of the FTB Form 592-B when filing a California tax return. The FTB Form 592-B is proof of California source income and withholding.

New in September 2011: Request reduced withholding online

Starting in September 2011, our website will have information, forms, and details on how foreign partners can request reduced withholding online.

Need our forms or more information?

  • Go to - search for withholding.
  • Email us at - In the subject line put: Nonresident Withholding.
    Do not send confidential information as this is not a secure email address.
  • Call us at:
    • 888.792.4900
    • 916.845.4900

Back to June 2011 Tax News