Just as property management companies and licensed brokers have amended their contracts over the years to comply with state laws, so too can they amend their contract to comply with this withholding requirement. The sample language below has been crafted by the Department of Real Estate to guide property management companies. This language can be used as an addendum to existing property management agreements to ensure the broker/property manager does not run afoul of the FTB while complying with the FTB withholding requirements.
“ (the “Principal”) authorizes (the “Property Manager”) to remit trust funds of the Principal -- which funds may consist in whole or part of rent or rents and other taxable income collected for the Principal by the Property Manager – to the California Franchise Tax Board as and for withholding taxes, when the Principal is subject to the Non-Resident Withholding Requirement under the statutory mandate of California Revenue and Taxation Code sections 18662, 18664 18666, 18668, and 17951”.
CAA urges all members to refresh themselves with the new requirements that become effective January 1, 2010, by clicking here to review the documents CAA provides on its Website in the CAA Reference Library under Specific Issues/Fees and Taxes. Included on the web page are links to all FTB forms needed for compliance, reporting and to request a waiver and/or exemption.
