Ref: CA Revenue & Taxation Code 18662

Application: All businesses in CA using nonresidents to provide SERVICES TO THE BUSINESS.

California has begun an aggressive campaign to catch businesses using nonresidents to provide services to CA businesses without collecting the 7% nonresident withholding on payments to the out-of-state service provider.

Example: You are Corporation ABC based in Los Angeles. You use a graphic designer in AZ. The invoice is $1,000. You remit $930 to the vendor and $70 to CA on their behalf. (You then send the $70 to the CA Franchise Tax Board and provide the vendor with a statement at year-end showing all nonresident withholding paid on their behalf).

Penalty: If you are found to be out-of-compliance with this law, you will owe the 7% that you should have withheld plus penalties.

If you think that you may be subject to this regulation, please call us immediately for further information.

Ref: CA budget deal 6/28/22.

The CA Governor and Legislature have reached a 2022-23 budget agreement containing refunds to return to taxpayers some of the current large budget surplus. The bills have not yet been voted on by the California General Assembly. IF PASSED, they will provide refunds to CA taxpayers. Qualifications:

1. Be a CA resident when the payment is issued and for at least six months during 2020;
2. Have filed the 2020 individual tax return by October 15, 2021;
3. And, not be claimed as a dependent on another taxpayer’s 2020 return.

The timing and method of payment are not yet determined.

A chart of the table for specific refund amounts is at:

www.caltax.com/files/2022/cataxrefunds.pdf

The IRS has expanded their online tool “Where’s My Refund” to allow access to information for two filing years. As of this writing that’s tax returns for 2020 and 2021.

The link to this tool is:

https://www.irs.gov/refunds