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What You Need To Know About California’s FTB 1581B

FTB 1581B

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:

  1. 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.
  2. Transfers of Real Property: Transfers of real estate between entities, such as partnerships, corporations, or trusts, are also subject to FTB 1581B withholding requirements.
  3. 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.

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FAQs

 The simple answer is no. A business and a person are completely separate, thus, any personal tax debts or liabilities should not affect your business.

Tax debt can be an exhausting and complicated thing to deal with on your own. Communicating with the IRS and professionally handling your tax liabilities are just two of the services companies like Priority Tax Relief can offer.

No. The IRS’s Innocent Spouse Relief protects you from paying these additional taxes. However, this does not relieve you from household employment taxes, business taxes, individual joint responsibility payments etc. Priority Tax Relief helps you learn more about innocent spouse relief.

The most popular option to date would be an Offer In Compromise (OIC). At Priority Tax Relief, we help tax relief help become more accessible to taxpayers in need and help them understand how they can qualify for these options.

IRS tax liens are legal claims on your property when you do not settle your tax debts. The IRS usually sends out a notice when no payment has been made after a liability assessment. Find out more about tax liens with Priority Tax Relief.

Yes. Not only can the IRS put a claim on all your current property, tax liens can also affect any property or intangible or tangible assets that you obtain in the future. At Priority Tax Relief, we help you understand federal tax liens and how to communicate with the IRS.

 

Tax levies are the actual seizure of your property and are different from legal claims or tax liens. Settle your taxes before the IRS sends out a notice. Priority Tax Relief helps you understand tax levies and how you can avoid them.

Yes. Not only can they seize physical property but they can also legally take hold of the money in your bank account and other wages. To avoid this from happening, contact Priority Tax Relief now.

Your debt will, unfortunately, continue to grow and you will possibly lose a great number of your assets. It is definitely a scenario we do not wish to see happen to anyone, that’s why Priority Tax Relief makes sure that our help becomes within reach.

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