California Withholding. Part 1. An overview.

Effective January 1, 2010 California Assembly Bill X4 18 (Tax Code 18664) will require 7% backup withholding be imposed for those California residents that are subject to Federal backup withholding and for non-California residents who are subject to Federal backup withholding for reportable payments sourced in California.

It is believed that dividends and interest are not subject to this California backup withholding but the proceeds of the sales of securities reported on Form 1099-B are.

Wonder why a distinction was made betweek California residents and non-California residents since reportable income sourced in California is subjected to the 7% withholding in both cases.

Interesting approach.

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IRS Announces 2010 Standard Mileage Rates

Beginning on January 1st, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 50 cents per mile for business miles driven,
• 16.5 cents per mile driven for medical or moving purposes, and 
• 14 cents per mile driven in service of charitable organizations.

IRS Qualified Intermediary (QI) – Know Your Client Rules

Logo of the Internal Revenue Service
Logo of the Internal Revenue Service (Photo credit: Wikipedia)

List of Approved Know-Your-Client Rules

Revenue Procedure 2000-12 states that the IRS will not enter into a qualified intermediary (QI) withholding agreement that provides for the use of documentary evidence obtained under a country’s know-your-customer rules if it has not received the know-your-customer practices and procedures for opening accounts and responses to 18 specific questions listed in the revenue procedure.This document lists those countries that have submitted know-your-customer rules and those rules have been approved.The QI agreement contains an attachment that lists the specific types of know-your-customer documentary evidence for each country that is sufficient for purposes of the QI.  The IRS is working together with the organizations that have submitted acceptable know-your-customer rules to develop standardized attachments.  The attachments can be seen here as soon as they are available.

If a country is on the approved list, entities and branches located in that country may submit their QI applications. Once a specific attachment has been developed for a particular country, the IRS will associate the attachment with the QI agreement it sends for signature. A QI may suggest amendments to the attachment, but departures from the standardized attachment may delay processing of an application.

To determine whether the know-your-customer rules that have been submitted to the IRS cover a particular QI applicant, the applicant should look to the specific country attachment. For example, in some countries, different rules apply to banks and brokers. A QI applicant that is a bank or a broker should verify that the know-your-customer rules that have been submitted cover all the rules applicable to that applicant.

For a list of countries, follow this URL: http://www.irs.gov/businesses/international/article/0,,id=96618,00.html

In-TAX-icating

In-TAX-icating.

Definition:

a: To excite or stupefy by taxation to the point where physical and mental control is markedly diminished

b: to excite or elate to the point of enthusiasm or frenzy… about taxation.

Passionate about Taxation.  Passionate about helping you!