Tax News
Withholding Form Changes and Updatess

We made changes to the following forms for 2013: 

  •  Form 593-I , Real Estate Withholding Installment Sale Acknowledgement, Part III, we inserted a new line requesting information from the promissory note to facilitate the processing of this form. We require the real estate escrow person to attach a copy of the promissory note to the Form 593-I. 
  • Form 593 Booklet, Real Estate Withholding Booklet, Section F, under Withholding Agent Instructions; we added new information to insure compliance with installment sale reporting. A withholding agent is required to withhold on the first installment payment. The first installment payment is calculated by subtracting the seller take back from withholding on the total sales price. For example, if withholding using the total sales price method:

The seller take back is subtracted because the buyer will withhold on any future principal payments.

Total Sales Price

$1,500,000

Less: Seller Take Back

500,000

First Installment Payment

$1,000,000

Withhold @ 3.33%

$33,300

  • Form 589 – Amended forms can only be filed by the payee.

To amend Form 589:

  • Complete a new Form 589 for the appropriate year with the correct information.
  • Write “Amended” at the top of the amended form.
  • Include a letter explaining what changes were made and why.
  • Send the amended form and letter to:

WITHHOLDING SERVICES AND COMPLIANCE
FRANCHISE TAX BOARD
PO BOX 942867
SACRAMENTO CA 94267-0651

  • Promissory Note – We require the real estate escrow person to attach a copy of the promissory note to Form 593-I, Real Estate Withholding Installment Sale Acknowledgement. To facilitate processing, enter the information from the promissory note requested in the new line added in Part III of the form.
  • Do Not Round Cents to Dollars –Enter the amounts with dollars and cents as actually withheld (do not round to the nearest whole dollar) on the following forms:

Reminder:  We eliminated Form 593-B beginning with tax year 2008. Real estate withholding is reported on FTB Form 593, Real Estate Withholding Tax Statement, when escrow is completed. Provide the seller with a copy within 20 days following the end of the month in which the transaction occurred.
For solutions to the most common real estate withholding errors that delay document processing and payment allocation, see FTB 761RE,TopTen Real Estate Withholding Errors.

For more information, go to ftb.ca.gov and search for real estate withholding.

Back to February 2013 Tax News