Last Updated on 05/14/2024 by Allison Ward
Why You Received This Notice
FTB 1581B or the “Hold Pending Federal Action" letter notifies the taxpayer that their audit is on hold until a final decision is reached at the federal level. By requiring the buyer or transferee to withhold a portion of the proceeds, the state can better enforce tax compliance and collect taxes owed by non-residents on their real estate dispositions.
What You Need To Do
FTB 1581B is applicable in various scenarios, including but not limited to:
- Sales of Real Property: When a non-resident individual or entity sells California real property, the buyer or transferee must file FTB 1581B and withhold the appropriate amount.
- Transfers of Real Property: Transfers of real estate between entities, such as partnerships, corporations, or trusts, are also subject to FTB 1581B withholding requirements.
- Exchanges of Real Property: Like sales and transfers, exchanges of California real property, such as 1031 exchanges, trigger FTB 1581B obligations.
Compliance with FTB 1581B involves sending the documentation requested by the FTB thru electronic upload or mail. You are responsible for withholding the correct amount and submitting it to the FTB within the specified time frame. Failure to comply may result in penalties for both the buyer and the seller.
The FTB 1581B is a crucial document that makes it easier to withhold taxes from sales of California real estate. The state can preserve tax compliance and promote income generation for public services by making sure that non-resident sellers or transferors are properly taxed. Understanding and adhering to regulations is essential to avoid any problems and guarantee a smooth procedure.
Need assistance with taxes or seeking tax relief? Contact Priority Tax Relief right away.