Withhold at Source Requirement: FTB 4086 MEO Letter - Spidell

Withhold at Source Requirement: FTB 4086 MEO Letter

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Message Board Withhold at Source Requirement: FTB 4086 MEO Letter

This topic contains 1 reply, has 2 voices, and was last updated by Lynn Freer 2 months ago.

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  • #161338
    Ward Anderson
    Participant

    Client just received a FTB Notice RE: Withhold at Source Requirement. Client is a technology CA S-Corp LLC, with Employees in 6 different states.  The out-of-CA employees are never in CA, operating as either sales or tech development services, and their wages are reported to their residence state.  The Corp is registered in each of the states with employees and/or sales reporting requirements.  There are no corporate assets in any state, including CA.  (It’s all tech programming.)

    Is the Corp required to withhold the indicated 7% CA Withholding for these employees? Would each non-CA employee qualify to file a Form 590, with the Corporation Exemption box checked?  TIA.  Happy Friday!

  • #161484
    Lynn Freer
    Participant

    If the payments are made to employees, no CA withholding at source should be deducted. If the employees spend time in CA, there should be withholding and wages based on total days spent in CA versus total days worked. If they are independent contractors, withholding could apply