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2016 Instructions for Form 590 <br />Withholding Exemption Certificate <br />References in these instructions are to the California Revenue and Taxation Code (R&TC). <br />General Information <br />Registered Domestic Partners (RDP) — For <br />purposes of California income tax, references <br />to a spouse, husband, or wife also refer to a <br />Registered Domestic Partner (RDP) unless <br />otherwise specified. For more information on <br />RDPs, get FTB Pub. 737, Tax Information for <br />Registered Domestic Partners. <br />A Purpose <br />Use Form 590, Withholding Exemption <br />Certificate, to certify an exemption from <br />nonresident withholding. <br />Form 590 does not apply to payments of <br />backup withholding. For more information, <br />go to Hb.ca.gov and search for backup <br />withholding. <br />Form 590 does not apply to payments for <br />wages to employees. Wage withholding is <br />administered by the California Employment <br />Development Department (EDD). For more <br />information, go to edd.ca.gov or call <br />888.745.3886. <br />Do not use Form 590 to certify an exemption <br />from withholding if you are a Seller of <br />California real estate. Sellers of California <br />real estate use Form 593-C, Real Estate <br />Withholding Certificate, to claim an exemption <br />from the real estate withholding requirement. <br />The following are excluded from withholding <br />and completing this form: <br />• The United States and any of its agencies or <br />instrumentalities. <br />• A state, a possession of the United States, <br />the District of Columbia, or any of its <br />political subdivisions or instrumentalities. <br />• A foreign government or any of its political <br />subdivisions, agencies, or instrumentalities. <br />B Income Subject to <br />Withholding <br />California Revenue and Taxation Code (R&TC) <br />Section 18662 requires withholding of income <br />or franchise tax on payments of California <br />source income made to nonresidents of <br />California. <br />Withholding is required on the following, but is <br />not limited to: <br />• Payments to nonresidents for services <br />rendered in California. <br />• Distributions of California source income <br />made to domestic nonresident partners, <br />members, and S corporation shareholders <br />and allocations of California source income <br />made to foreign partners and members. <br />• Payments to nonresidents for rents if the <br />payments are made in the course of the <br />withholding agent's business. <br />• Payments to nonresidents for royalties from <br />activities sourced to California. <br />• Distributions of California source income to <br />nonresident beneficiaries from an estate or <br />trust. <br />• Endorsement payments received for services <br />performed in California. <br />• Prizes and winnings received by <br />nonresidents for contests in California. <br />However, withholding is optional if the total <br />payments of California source income are <br />$1,500 or less during the calendar year. <br />For more information on withholding get <br />FTB Pub. 1017, Resident and Nonresident <br />Withholding Guidelines. To get a withholding <br />publication, see Additional Information. <br />C Who Certifies this Form <br />Form 590 is certified by the payee. California <br />residents or entities exempt from the <br />withholding requirement should complete <br />Form 590 and submit it to the withholding <br />agent before payment is made. The withholding <br />agent is then relieved of the withholding <br />requirements if the agent relies in good faith <br />on a completed and signed Form 590 unless <br />notified by the Franchise Tax Board (FTB) that <br />the form should not be relied upon. <br />An incomplete certificate is invalid and the <br />withholding agent should not accept it. If the <br />withholding agent receives an incomplete <br />certificate, the withholding agent is required <br />to withhold tax on payments made to the <br />payee until a valid certificate is received. In <br />lieu of a completed exemption certificate, the <br />withholding agent may accept a letter from <br />the payee as a substitute explaining why they <br />are not subject to withholding. The letter must <br />contain all the information required on the <br />certificate in similar language, including the <br />under penalty of perjury statement and the <br />payee's taxpayer identification number. The <br />withholding agent must retain a copy of the <br />certificate or substitute for at least four years <br />after the last payment to which the certificate <br />applies, and provide it upon request to the FTB. <br />If an entertainer (or the entertainer's business <br />entity) is paid for a performance, the <br />entertainer's information must be provided. <br />Do not submit the entertainer's agent or <br />promoter information. <br />The grantor of a grantor trust shall be treated <br />as the payee for withholding purposes. <br />Therefore, if the payee is a grantor trust and <br />one or more of the grantors is a nonresident, <br />withholding is required. If all of the grantors <br />on the trust are residents, no withholding is <br />required. Resident grantors can check the <br />box on Form 590labeled "Individuals <br />— <br />Certification of Residency." <br />25C-19 <br />D Definitions <br />For California non -wage withholding purposes, <br />nonresident includes all of the following: <br />• Individuals who are not residents of <br />California. <br />• Corporations not qualified through the <br />California Secretary of State (CA SOS) <br />to do business in California or having no <br />permanent place of business in California. <br />• Partnerships or limited liability companies <br />(LLCs) with no permanent place of business <br />in California. <br />• Any trust without a resident grantor, <br />beneficiary, or trustee, or estates where the <br />decedent was not a California resident. <br />Foreign refers to non -U.S. <br />For more information about determining <br />resident status, get FTB Pub. 1031, <br />Guidelines for Determining Resident Status. <br />Military servicemembers have special rules <br />for residency. For more information, get <br />FTB Pub. 1032, Tax Information for Military <br />Personnel. <br />Permanent Place of Business: <br />A corporation has a permanent place of <br />business in California if it is organized and <br />existing under the laws of California or it has <br />qualified through the CA SOS to transact <br />intrastate business. A corporation that has <br />not qualified to transact intrastate business <br />(e.g., a corporation engaged exclusively in <br />interstate commerce) will be considered as <br />having a permanent place of business in <br />California only if it maintains a permanent <br />office in California that is permanently staffed <br />by its employees. <br />E Military Spouse Residency <br />Relief Act (MSRRA) <br />Generally, for tax purposes you are considered <br />to maintain your existing residence or domicile. <br />If a military servicemember and nonmilitary <br />spouse have the same state of domicile, the <br />MSRRA provides: <br />• A spouse shall not be deemed to have lost <br />a residence or domicile in any state solely <br />by reason of being absent to be with the <br />servicemember serving in compliance with <br />military orders. <br />• A spouse shall not be deemed to have <br />acquired a residence or domicile in any <br />other state solely by reason of being there <br />to be with the servicemember serving in <br />compliance with military orders. <br />Domicile is defined as the one place: <br />• Where you maintain a true, fixed, and <br />permanent home. <br />• To which you intend to return whenever you <br />are absent. <br />Form 590 Instructions 2015 Page 1 <br />