California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 2.6 - Administration of Franchise and Income Tax › Subchapter 2 - Returns › Article 5 - Withholding › Section 18662-1 - Withholding - Generally

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
					 Types of Withholding -- Application of Regulation sections
					 18662-0 through
					 18662-8.
(1) Overview. California law requires
					 withholding of tax by persons having the control, receipt, custody, disposal,
					 or payment of items of income, commonly termed "withhold at source." Regulation
					 sections 18662-0 through
					 18662-8 apply to withholding of
					 tax at source and do not apply to wage withholding, withholding orders for
					 delinquent taxes, withholding on foreign (non-U.S.) partners and members
					 (except with respect to the reporting on and filing of information returns and
					 remittance of payments as set forth in Regulation sections
					 18662-4 and
					 18662-8), backup withholding, or
					 tax collection through the interagency intercept program.
(A) Withholding Tax on Wages. Withholding tax
					 on wages is required by Division 6 of the California Unemployment Insurance
					 Code (section
					 13000 et seq.) and is administered
					 by the Employment Development Department. (See Revenue and Taxation Code
					 section
					 18632.)
					 Regulation sections
					 18662-0 through
					 18662-8 do not cover withholding
					 tax on wages.
(B) Withholding
					 Orders for Delinquent Taxes. Withholding orders for delinquent taxes may be
					 issued pursuant to Revenue and Taxation Code section
					 18670
					 and other statutes relating to involuntary collection, levies, and wage
					 garnishments. Regulation sections
					 18662-0 through
					 18662-8 do not cover withholding
					 orders for delinquent taxes.
(C)
					 Foreign (Non-U.S.) Partners and Members. Revenue and Taxation Code section
					 18666
					 and federal provisions incorporated by reference apply to withholding on
					 foreign (non-U.S.) partners and members who have allocable amounts of
					 effectively connected income to a California trade or business. Regulation
					 sections 18662-0 through
					 18662-8 do not cover withholding
					 on foreign (non-U.S.) partners and members, except with respect to the
					 reporting on and filing of information returns and remittance of payments as
					 set forth in Regulation sections
					 18662-4 and
					 18662-8. (See Treasury Regulation
					 section 1.1446-0 et seq. and Internal
					 Revenue Service (IRS) publications.)
(D) Backup Withholding. With certain limited
					 exceptions (which include payment of interest and dividends, and any release of
					 loan funds made by a financial institution in the normal course of business as
					 stated in Revenue and Taxation Code section
					 18664,
					 subdivision (a)(3)), backup withholding is required by Revenue and Taxation
					 Code section
					 18664
					 on payments where federal backup withholding is required. Regulation sections
					 18662-0 through
					 18662-8 do not cover withholding
					 taxes on backup withholding.
(E)
					 Interagency Intercept Program. Government Code section
					 12419.5
					 authorizes the State Controller's Office to collect money owed to one state
					 agency by a person or entity by deducting the amount owed from any money to be
					 paid to such person or entity by another state agency. This procedure is called
					 an interagency intercept. Payments to a person or entity by the State include
					 but are not limited to a refund of a tax, license, or fee, or a payment for
					 services rendered. Regulation sections
					 18662-0 through
					 18662-8 do not cover interagency
					 intercepts.