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 4 - Information Returns › Section 18631-18681(b) - Payments of Salaries, Interest, Rents, Royalties, and Other Fixed or Determinable Income

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(1)
					 Except as provided in subsection (2), and except for payments to which
					 subdivisions (a) and (c) of Section
					 18639 apply, every individual,
					 partnership, bank, corporation, including a nonprofit corporation or
					 organization, joint stock company or association, insurance company, or
					 Massachusetts or business trust, engaged in a trade or business in this State
					 and making payment in the course of such trade or business to another person,
					 including lessees or mortgagors of real or personal property, fiduciaries,
					 employers, and all officers and employees of this State or of any political
					 subdivision of this State, or any city organized under a freeholder's charter,
					 or any political body not a subdivision or agency of the State, shall make a
					 return on forms prescribed by the Franchise Tax Board for each calendar year,
					 with respect to wages, salaries, interest, rents, royalties, and other fixed or
					 determinable income paid, credited or distributed. Such payments are required
					 to be reported if the total amounts paid to a single person are $1,500 or more,
					 and in the case of a married individual are $3,000 or more. Payments of wages,
					 salaries and other compensation for personal services rendered in this State,
					 and payments of rents or royalties on account of property located in this State
					 must be reported irrespective of the residence or address of the payee.
					 Payments of interest and payments of income on account of services performed,
					 or property located outside this State need be reported only if the payee is a
					 resident of this State. If the payee's residence is unknown to the payor, such
					 payments shall be reported if the payee's last known address was in this State.
					 If the marital status of the individual is unknown, report all such payments of
					 $1,500 or more. Payments made to the officers of a corporation must be
					 reported. Payments in the case of annuities with an annuity starting date
					 before January 1, 1968, should be reported in an amount equal to 3 percent of
					 the aggregate premiums or consideration paid for the annuity (whether or not
					 paid during the taxable year), until the aggregate amount paid to and not
					 required to be included by the annuitant in his gross income, had the law been
					 in effect continuously from and after the date at which payments under such
					 annuity were first received, equals the aggregate premiums or consideration
					 paid for such annuity; thereafter the entire amount of the annuity payments
					 shall be reported. Payments in the case of annuities with an annuity after
					 January 1, 1968, should be reported except to the extent that they are
					 considered to represent a reduction or return of premiums or other
					 consideration paid. The part of each annuity payment which is excludable from
					 gross income is determined by the ratio which the investment in the contract
					 bears to the expected return under the contract. In the case of annuities with
					 an annuity starting date on and after January 1, 1968, in lieu of the return
					 required by this subsection, a duplicate copy of the Federal return may be
					 filed with the Franchise Tax Board.
(2) The following payments need not be
					 reported regardless of the amount paid:
(A)
					 Payments of any type made to a corporation;
(B) Distributions or salaries to members of a
					 partnership or distributions to beneficiaries of an estate or trust, which are
					 shown on the Partnership or Fiduciary Return;
(C) Rents paid by a tenant to a real estate
					 agent having a place of business in this State, but the agent must report
					 payments to the landlord;
(D)
					 Payments made by a broker to his customer;
(E) Payments to nonresidents which are
					 reported by the withholding agent on forms prescribed by the Franchise Tax
					 Board;
(F) Payments of income
					 exempt from taxation under the law;
(G) Payments which are made by those not
					 engaged in a trade or business and which are not made in the course of such
					 trade or business, such as amounts paid by a tenant to a landlord for the
					 renting or leasing of a residence;
(H) Payments of bills for merchandise,
					 telegrams, telephone, freight, storage, and similar charges;
(I) Payments made by record owners to the
					 actual owners of dividends and other distributions on stock, earnings from
					 savings and loan associations, mutual savings banks, credit unions, etc.,
					 interest, or similar payments;
(J)
					 Payments made to employees of interstate carriers that are exempted from
					 reporting by Public Law
					 91-569; and
(K) Payments made to principals by persons
					 carrying on the banking business, and by persons which are mutual savings
					 banks, cooperative banks, building and loan associations, homestead
					 associations, credit unions, or similar organizations chartered and supervised
					 by Federal or State law, of funds collected when acting in the capacity of
					 collection agents. This exception does not apply to collection of items on a
					 regular and continuing basis under a so-called escrow, trust, custody or
					 investment advisory agreement. However, returns of information are not required
					 unless payment is of the type with respect to which such returns would
					 otherwise be required under Section
					 18637 if the payor were engaged in
					 a trade or business. The exception from reporting set forth in this paragraph
					 shall apply until such time as the Franchise Tax Board determines that it is
					 feasible for such persons to report the payments, and this paragraph is amended
					 accordingly to require such reporting.