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State Reporting | Tax Information Reporting Skip to main content

Question's with regards to California State Resident/ Non-Resident Withholding forms 587 and 590?

Question

1. We would like to know if a non resident entity we do business with can list their sister entity whom resides in Californa as a place of business to qualify them as an exemption to California withholding?

2. What kind of validation are we as the Witholding Agent responsible for with regards to the information provided on the form 587 or 590 by the recipient?

3. We have a permenant place of business in the State of California under, however we report our Federal 1099 Reporting under  a different entity name and Tax ID that is not registered with the California Secretary of State.  Are we required to perform California Withholding as a Withholding Agent?

Answer

For ease of reference we will answer your questions using your numerated convention as follows:

1.)    There are certain conditions that if the non resident domestic entity in question meets absolutely requires it to abide by the State of California’s withholding laws:

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If we are a Multistate employer and we report all new hires to the state of Montana, which does not require independent contractors new hire reporting would we have to still report to California

Question

From my understanding, California requires the reporting of New Hire Independent Contractors.  Can you tell me if we are a Multistate employer and we report all new hires to the state of Montana, which does not require independent contractors new hire reporting would we have to still report to California?  I ask this because in the following article, retrieved off the Dept of Health and Human Services, it states that we would NOT  have to report new independent contractors to CA.

Would you mind confirming or clarifying this for me.

http://www.acf.hhs.gov/programs/cse/pol/AT/1998/at-9806.htm

Q17: According to OCSE-AT-97-04, issued March 12, 1997, Federal law does not require entities to report the hiring of independent contractors. If a State has nevertheless enacted a law requiring employers to report not only newly hired employees but also independent contractors, must a multistate employer that has employees and independent contractors in that State report the independent contractors to the State even if the employer had designated another State to which it will report its newly hired employees?

A17: No. A multistate employer that has employees in two or more States and that designates one State in which the employer has one or more employees to which the employer will transmit new hire reports magnetically or electronically is bound by the new hire reporting requirements of the State to which the employer chooses to report. Thus, if an employer has employees in State A and State B and chooses to designate State A as the State to which the employer will transmit the reports, the employer is bound by the requirements of State A. The employer is not required to report independent contractors to State B if State A does not require such reporting, even

Answer

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Must a multistate employer that has employees and independent contractors in that state report the independent contractors to the state?

Question

Federal law does not require entities to report the hiring of independent contractors. If a state has nevertheless enacted a law requiring employers to report independent contractors, must a multistate employer that has employees and independent contractors in that state report the independent contractors to the state even if the employer had designated another state to which it will report its newly hired employees?

Answer

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Reportability of Freight and Sales Tax Regarding Prizes and Awards for Non-Employees?

Question

Regarding prizes and awards for non-employees, in determining "Fair Market Value" of a prize (example: ipad), are items such as freight and sales tax included when determining whether it is reportable on Form 1099-MISC in Box 3 under the $600 threshold?

Answer

First let's look at the freight issue as it applies to the determination of "Fair Market Value".

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How do you Know when Sales Tax is Applicable to a Contractor?

Question

How do you know when sales tax is applicable to a contractor?

For example, if a company hires a contractor to install a heating and air system and purhcases the unit from the contractor or if a contractor is hired to repair something and charges for material? How would the payee know if the contractor had already paid taxes on his purchases?

Can you give me some examples of when a payee should either pay or accrue sales tax to a contactor?

Answer

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Doing Business in California and Questions on CA Forms 587 and CA 590

Question

I have read through FTB Pub 1017 but I am not sure I completely understand it.

We are currently obtaining completed CA Form 590 from all businesses/freelancers located in California.

(FTB Pub 1017 states that if provided a permanent CA address the form is not needed. Please see page 8, number 36, example 2).      

We are currently requesting CA Form 587 from all businesses/freelancers who work with our branch offices located in California or whenever the payment is being remitted to lockbox in California but business/freelancer does not have permanent place of business there.

On these forms the payee has checked the box for “Performs services totally outside CA (no withholding required, skip to Part V)”.

I am a little confused when it comes to the businesses/freelancers who work with our business offices that are located in CA,

since our company headquarters are in Des Moines IA do we need CA Form 587 from these payees?

Is Form 587 required when we are only sending payments to lockboxes in CA?

Answer

A couple of things here.

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What Efforts Do We Need to Expend to Track Down and 1099 a Payee?

Question

What is the obligation to print and mail a 1099 when the last known address on the account is incorrect, the account is closed (was an insurance/annuity account), and/or the recipient is known to be deceased?  The question isn't about what to keep when the 1099 is returned as undeliverable by the PO, but are we required to mail the 1099 under the above stated circumstances?

Answer

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State Reporting Question Regarding Michigan, Rhode Island, and West Virginia

Question

We are a bank in Pennsylvania with IRA customers who have received distributions reported on form 1099-R, who are residents of Michigan, Rhode Island, and West Virginia.  Are we required to file a copy of the 1099-R with these states?  And if so, where? 

Answer

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New Jersey and California State Reporting Issues

Question

We are reviewing or 1099 reporting obligations for the states, and we need further clarification on three issues.

1. For the State of NJ - In reviewing the state information tax grid - reporting is required if taxes are withheld and payments met the $1,000 threshold. What would prompt us to withhold taxes?  We have two consultants that we currently do not withhold state taxes. 

2. For the State of CA – In reviewing the state information tax gird, regarding footnote 13 form DE 542, in appears that this form should be filed within 20 days of payment or contracting with the consultant. We are past this time frame. Is it still necessary to file this? When filing the 1099-MISC will that trigger CA to look for DE 542? Also is the DE 524 an annual filing? 

3. For the States of CA & NJ - Please confirm that we need to only provide a copy of the 1099-MISC.

Answer

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Does Massuchesetts Allow Payments from one Year to be Reported in Previous Year

Question

Are there any cases where the state of MA would allow payments made in January 2011 to be reported on a 2010 1099?

Answer

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