smith[at]msn.com wrote:

- quote -

The SELLER has no responsibility to withhold taxes. Under CA
law, it is the buyer who must withhold. Generally, the
escrow company assumes that responsibility. The escrow
company withholds the amount and sends it to the CA FTB.
The escrow co./buyer should have withheld 3 1/3% of the
selling price before they sent the client the check. If
they failed to do that, then the escrow company is on the
hook for the 10% penalty or the buyer is on the hook for the
penalty if the escrow co had formally notified the buyer of
the responsibility.

They're just trying to get off the penalty hook. Your
client has no obligation to respond.

Detail information on this subject is at:
http://www.ftb.ca.gov/individuals/ws...al_Estate.html

--
Alan
http://taxtopics.net

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Could someone familiar with CA taxes help with this?
I have a client who retired to WA from CA many years ago.
He has just sold a warehouse rental for about $650,000
and the title co. neglected to withhold state tax.

I calculated the estimated tax he would owe including
the capital gains and had him submit an estimated tax
payment of $50,000. He was then contacted by the
Title Co. who demanded that he send them back the $20,000
they should have withheld. He is refusing, of course, since
he has already paid the tax in his estimate.

The title company now wants him to fax the Franchise
Tax Board a request to "transfer" $20,000 of his estimate
payment to the "real estate withholding section". I think
this sounds bogus - i.e. does nothing for the client, and is
simply an attempt by the Title Co. to get out of hot water
for not withholding the tax in the first place.

Client is inclined to ignore this request - any potential
trouble if he does??

J. Smith, CPA

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